• Silvergate shares experienced a significant decline of nearly 60% on Thursday due to business partners and investors leaving abruptly.
• The company was unable to submit its annual report on time to the US Securities and Exchange Commission (SEC).
• Several other crypto firms, including Galaxy Digital, Coinbase, and Paxos Trust, have decided to stop accepting or initiating payments through Silvergate.
Silvergate Shares Plummet after Financial Instability
Silvergate shares experienced a significant decline of nearly 60% on Thursday due to both business partners and investors leaving abruptly to avoid financial instability. The drop was the largest ever seen for Silvergate. On Wednesday, Silvergate announced that it was unable to submit its annual report on time to the US Securities and Exchange Commission (SEC).
Analysts Downgrade Ratings
As a result, three analysts downgraded their ratings of the stock, with one removing their price target altogether because of the significant level of uncertainty surrounding the company. JPMorgan downgraded Silvergate from “neutral” to “underweight” after the company announced it was assessing its ability to continue operating as a going concern. Canaccord Genuity Group downgraded the bank to “hold,” while Compass Point Research & Trading LLC downgraded it to “neutral”.
FTX Contagion Rattles Silvergate Shares
The crypto market has been impacted by the aftermath of the FTX collapse, and Silvergate has been directly affected since the bank had approximately $1 billion in deposits from the now-defunct exchange when it collapsed. Additionally, several other crypto firms, including Galaxy Digital, Coinbase, and Paxos Trust, have decided to stop accepting or initiating payments through Silvergate. This exodus poses a major risk to the bank’s primary source of deposits and its role as a platform for crypto participants to transfer money between one another.
Coinbase Ceases Payments with SilverGate
Coinbase released a statement shared on Twitter saying “In light of recent developments and out of an abundance of caution Coinbase is no longer accepting or initiating payments To or from SilverGate” At Coinbase all client funds continue to be safe accessible & available.
Regulatory Issues Stirring The Pot
More than $11 billion in assets are frozen at FTX which could prompt regulators into taking further action against other exchanges who may be using similar tactics as those used by FTX before they collapsed .This could create more issues for silver gate if they are found not compliant with regulations set forth by government agencies such as FINRA or SEC .