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The shares of crypto bank, Silvergate, were down around 7%. Additionally, the other crypto-linked stocks rallied on November 15, 2022. Amid Silvergate Bank’s exposure to FTX, Goldman Sachs has cut down the price target and is now expecting greater deposit outflows.
The after effect of FTX collapse is spreading pretty fast. As on Tuesday, November 15, 2022, the stock price of crypto bank Silvergate tanked by a staggering 17% slipping below $30.
The following happened due to Silvergate’s proposed exposure to the bankrupt crypto exchange FTX. In the previous week, the crypto bank stated that its exposure to FTX was limited to deposits. And a recent note by the analyst of Goldman Sachs marked that it couldn’t confirm Silvergate’s exposure to FTX and its other related entities.
On the other hand, other crypto stocks including Coinbase (COIN), MicroStrategy (MSTR) and Marathon Digital (MAR) gained as the Nasdaq Composite is up over 2%.
Silvergate noted to the investors late Friday on November 11, 2022, that FTX’s deposits with Silvergate represent less than 10% of the $11.9 Billion in total deposits from all digital asset customers.
However, an early and strong skeptic of all things SBF, Marc Cohodes told Hedgeye on Tuesday that he’s shorting Silvergate, noting that FTX making up such a large portion of Silvergate’s deposit base is a big red flag.
The Statement by Silvergate CEO
Alan Lane, Silvergate Chief Executive Officer, said that “In light of recent developments, I want to provide an update on Silvergate’s exposure to FTX. As of September 30, 2022, Silvergate’s total deposits from all digital asset customers totaled $11.9 billion, of which FTX represented less than 10%. Silvergate has no outstanding loans to, nor investments, in FTX, and FTX is not a custodian for Silvergate’s bitcoin-collateralized SEN Leverage loans. To be clear, our relationship with FTX is limited to deposits”.
Mr. Lane also assured that the crypto bank’s operations are running absolutely normally. As of now, all SEN Leverage loans are performing absolutely normally with zero losses and no forced liquidations.
He further stressed as all the SEN Leverage loans are collateralized by Bitcoin and don’t collateralize SEN Leverage loans with other digital assets or make any unsecured loans.
He concluded his words by saying “Silvergate’s platform was built to support our clients during times of market volatility and transformation, and the SEN has continued to operate as designed and without interruption. As a federally regulated banking institution that is well capitalized, we maintain a strong balance sheet with ample liquidity to support our customers’ needs.”
It must be noted that Silvergate Exchange Network (“SEN”) is operating 24*7 with average daily volume of $1.9B quarter-to-date vs. average daily volume of $1.2B in Q3 2022.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
