Silvergate Capital Corporation, the parent company of Silvergate Bank, delayed its annual 10-K report filing with the U.S. Securities and Exchange Commission on Wednesday, telling the agency it “needs additional time” to allow an independent accounting firm to complete certain audit procedures.
In the filing, Silvergate also cited “a number of circumstances” that will “negatively impact” the timing of the 10-K report.
These include the sale of additional investment securities “beyond what was previously anticipated and disclosed in the company’s earnings release,” as well as the sale of additional debt securities in January and February 2023, from which Silvergate “expects to record further losses.”
Crypto-Friendly Bank Silvergate Is Most Shorted Stock
Crypto-friendly Silvergate Bank has clinched the title of most shorted stock on Wall Street—a strong indication that traders think the beleaguered bank’s stock price will continue to go down. Of all the shares in Silvergate that are available for investors to buy and sell, 73.5% of them are being sold short, according to data from MarketWatch. The next most shorted stocks are Carvana (60.6%), followed by Applied UV (50.3) and Bed Bath & Beyond (48%). When an investor sells a stock short, they bo...
According to Silvergate, “these additional losses will negatively impact the regulatory capital ratios of the Company and the Company's wholly owned subsidiary, Silvergate Bank [...] and could result in the Company and the Bank being less than well-capitalized.”
Silvergate’s stock (SI) was trading at $13.53 at the closing bell Wednesday, but plunged as much as 31.7% on the tail of the news in after-hours trading, dipping well below $10.
Silvergate to reevaluate strategy
Silvergate reported a $1 billion net loss as well as a decline in customer deposits of roughly $14 billion in the last quarter of 2022, citing the "planned reduction in digital asset banking deposits" alongside industry-wide chaos.
The bank's deposits were rocked in the aftermath of the FTX collapse, prompting it to tap the Federal Home Loan Bank (FHLB) for a $4.3 billion loan in January and sold roughly $5.2 billion in debt securities, according to the company’s filings.
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LedgerX, a trading platform offering derivatives products based on Bitcoin and Ethereum cryptocurrencies, is no longer using Silvergate Bank to receive domestic wire transfers, according to a Bloomberg report. Going forward, LedgerX will use Signature Bank instead, the company said in an email to customers. LedgerX was acquired by FTX.US in 2021 and was one of the few Sam Bankman-Fried-linked projects which remained solvent in the aftermath of FTX’s Chapter 11 bankruptcy proceedings last Novembe...
Silvergate, which was hit with a class action lawsuit alleging it directly aided FTX’s fraudulent activities in December, is also one of the most shorted stocks on Wall Street, with as much as 71% of all shares in the company that are available for investors to buy and sell being short positions, according to MarketWatch.
In its Wednesday filing with the SEC, Silvergate also said it is “currently analyzing certain regulatory and other inquiries and investigations that are pending with respect to the Company.”
Silvergate added that it's now “in the process of reevaluating its businesses and strategies in light of the business and regulatory challenges it currently faces.”
