Silvergate (SI) CEO Alan Lane has publicly addressed its investors. He intends to “set the record straight” about the crypto bank’s ties to bankrupt exchange FTX and its financial state.
Lane said in a public letter published on Monday that Silvergate has been attacked by “short sellers and other opportunists trying to capitalize on market uncertainty.” He also accused them of spreading unfounded speculation.
Lane is referring to the speculation related to its relationship with FTX and its sister hedge fund Alameda Research. While Silvergate has denied having been a creditor to FTX, it admitted it had a significant deposit relationship with the defunct exchange. The bank said a month ago that it had around $1 billion in deposits from FTX, representing about 10% of all of its customer deposits.
However, Lane said Silvergate conducted “extensive due diligence on FTX and Alameda Research.” He asserts that the bank did so during the onboarding process and while FTX was its customer.
“Silvergate conducted significant due diligence on FTX and its related entities including Alameda Research, both during the onboarding process and through ongoing monitoring, in accordance with our risk management policies and procedures and the requirements outlined above,” he said.
He added that if the bank sees any suspicious activity related to specific accounts, it follows the necessary procedures to report it.
Lane also addressed the company’s financials and said it has “ample liquidity” and a “resilient balance sheet.”
“While this has been a turbulent time in the digital asset industry, our customers’ deposits are, and have always been, safely held. In addition to the cash we carry on our balance sheet, our entire investment securities portfolio can be pledged for borrowings at the Federal Home Loan Bank, other financial institutions, and the Federal Reserve Discount Window. It can ultimately be sold should we need to generate liquidity to satisfy customer withdrawal requests,” he said.
However, Lane’s comments seem to have hurt the company’s stock. SI traded almost 9% lower on Monday at $24.24, according to data from Yahoo! Finance. It’s down over 50% over the last month.
At the same time, others have used the opportunity to buy discounted SI shares. Brendan Blumer, founder of Block.one, the development firm behind the EOS blockchain, purchased 9.27% of the crypto bank last month. This made him the majority owner of the company.
Silvergate is one of the few banks that are crypto-focused. The past month’s events indicate that it might be having a tough time surviving the fallout of FTX. With the dump in its stock price, the crypto activity crash is impacting.
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Block.One and Its Founder Buy Almost 9.27% of Crypto Bank Silvergate (SI)
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Source: Cryptocurrency - investing.com
