• Silvergate Capital is holding talks with the US Federal Deposit Insurance Commission (FDIC) to solve its deepening financial crisis.
• The FDIC has hinted that Silvergate could get prominent crypto market participants to invest, or it could be taken over through a receivership arrangement and possibly merged with another lender.
• Silvergate’s stock price has dropped 69.83% YTD, and investigations by US authorities have further worsened the bank’s crisis.
Silvergate Turning to US Congress Agency for Help
Silvergate Capital is reportedly seeking assistance from the US Federal Deposit Insurance Commission (FDIC) in order to remain afloat amid its financial woes. The FDIC recently visited Silvergate Capital’s California office in order to discuss potential solutions such as getting prominent crypto market participants to invest in the lender or going through a receivership arrangement and possibly merging with another lender.
Collapse of FTX Exchange & Alameda
The collapse of Sam Bankman-Fried’s FTX exchange and sister company Alameda last year are major contributors to Silvergate’s financial issues, as the firm had close ties with both companies. This led to a bank run on Silvergate, resulting in employee layoffs and selling off assets at a loss in an effort to save their situation. In January 2021, the lender reported a $949 million loss in its Q4 filing with the US Securities and Exchange Commission (SEC), suspending Series A stock dividend payouts as part of capital preservation efforts.
Current Standing & Investigations
Silvergate Capital’s current standing is dire, dropping 69.83% YTD and exchanging hands for $5.13 at the time of writing according to sources close to the matter. Crypto market participants that previously did business with them such as Coinbase and Circle have reportedly ditched them due ongoing investigations by US authorities into their operations which have further exacerbated their problems..
It remains unclear whether or not Silvergate will be able overcome its unending challenges but many believe that if they can garner enough investors, then they may be able avoid bankruptcy altogether; however this remains uncertain due to numerous factors affecting their current situation .
In conclusion, it is clear that if Silverage doesn’t receive any outside help soon then they may be facing serious trouble ahead; however only time will tell what exactly happens next as no decisions have been made yet regarding how best move forward for them .