Silvergate Bank’s chilling descent into financial difficulty has sent investors into a frenzy, with retail investors bracing for a crypto world’s ‘death spiral’. The crypto-friendly bank, who had access to money from numerous crypto exchanges, has just announced the delay of its annual 10-K filing, sending stocks tumbling by over 30%.
The 10-K filing, a document required by the Securities and Exchange Commission, provides a comprehensive overview of a company’s business and financial condition – along with any expected losses and liabilities. In the ‘forward-looking statements’ section, Silvergate has hinted towards the existence of regulatory scrutiny regarding its operations.
This comes after Reuters reported two weeks ago that Binance (global) had access to the Silvergate Bank account of Binance.US, and had moved millions to a trading firm owned by Binance (global) CEO Changpeng Zhao without the Binance.US’ CEO’s knowledge. Amidst this, the company has revealed that a number of factors could have an impact on the financial health of the firm, such as the substantial volatility experienced in Q4 of 2022, several high-profile bankruptcies in the same year that shook investor confidence in cryptocurrencies and stricter regulations set in place by the banking sector providing digital asset services.
The firm is also concerned over customer retention while it faces potential liabilities or restrictions from any potential litigation.
This looming crisis is set to have a very real and immediate impact to retail investors, with the stock nearly tumbling down to its all-time low afterhours. Corporate giants like State Street, BlackRock and Icarus Securities have also entered the fray with stakes of the company. However, it is still a mystery where their funds remain invested at, due the lack of transparency and recent volatility in the stock market.
Crypto enthusiast are sure to bear feeling the heat in the coming months, as the uncertain space of digital assets become even more muddled with a potential ‘death spiral’. Only time will tell if Silvergate Bank can truly regain its financial health and investor confidence, before it’s too late.
