Silvergate capital stocks had dropped close to 31% after the bank announced that it is planning to wind down its operations and liquidate the bank after months of turmoil. Let's take a closer look.
Why is Silvergate Capital Stock Going Down?
The network was well-liked by institutional traders and crypto exchanges because, unlike a large portion of the US banking system, crypto trades are conducted continuously.
However, once the FTX debacle played out, things at Silvergate started to go downhill. Concerns over whether Silvergate may face regulatory action for its relationship with FTX, a significant client of Silvergate's, caused a crisis of trust inside the bank. The bank is being looked into by the US Department of Justice.
Almost 70% of Silvergate's deposits left the bank in the fourth quarter of 2022, causing the company to liquidate a sizable portion of its bond portfolio at a loss and destroying a sizable amount of shareholder equity. Most bonds are now underwater interest due to rising .
Silvergate reported last week that additional bond sales had continued in the most recent quarter, resulting in additional losses and potentially lowering the bank below its required regulatory capital ratios. As a result, Silvergate had postponed filing its annual report with the Securities. The bank added that it was unsure about its ability to carry on.
It appeared at that moment that the bank, which had previously been considered as a very promising company and stock, was all but finished when Silvergate suddenly shut down its payments network.
Why is Silvergate Capital Stock Going Down? - Hopefully, this article can help you to get some knowledge.
