Is Silvergate the Next Crypto Company To Fall?
Who are Silvergate?
They are a crypto bank and much of their business is from large crypto investors who use Silvergate as a middleman to buy crypto from exchanges.
They work with most, if not all major crypto exchanges… including FTX.
Strong links to FTX & SBF
Sam Bankman-Freid endorsed them, particularly their “risk management” department… we all know about SBF’s risk management credentials. FTX held some deposits at Silvergate in what’s known as an omnibus account—meaning the assets belonged to FTX customers. It was FTX’s responsibility to keep a ledger tracking the underlying customer assets, a common setup for firms that aren’t banks themselves. Silvergate wouldn’t have had visibility into the omnibus account to know whether FTX or its underlying customers were moving assets, people familiar with the relationship said. FTX has halted withdrawals, and Silvergate has told customers it cannot take direct requests to withdraw from the FTX accounts.
My Fears
-Contagion of FTX could spill over into this stock ...
- It is the second-most heavily shorted regional bank
-“No bank in the world can honor every deposit held on its balance sheet with cash” - analyst Michael Perito
- Bank of America Quote “After [third-quarter] earnings, we posed the question: ‘Is the worst behind them?’” Bank of America analysts wrote in downgrading the stock. “We were wrong.”
- Morgan Stanley has once again lowered its 2023 EPS estimate for Silvergate Capital (NYSE:SI), arguing that the digital asset-focused bank faces a "wide range of outcomes and risks" from the demise of crypto exchange FTX.
- Silvergate (SI) disclosed last week that its average quarter-to-date digital customer deposits slid to 9.8B (excluding FTX deposits) as of November 15 from 11.9B on September 30.
- Manan Gosalia, an equity analyst at Morgan Stanley, estimated that Silvergate's (SI) digital deposit balances for quarter-end will drop further to 55B So this would mean they are down 64% in deposits from the start of the year…
- Founder of EOS Developer Block.One Buys 9.3% of Crypto Bank Silvergate ... Why does the company need to sell nearly 10% of its equity? It seems a very coincidental time to be selling stock. Does it need to raise capital?
Strong links to FTX & SBF
Sam Bankman-Freid endorsed them, particularly their “risk management” department… we all know about SBF’s risk management credentials. FTX held some deposits at Silvergate in what’s known as an omnibus account—meaning the assets belonged to FTX customers. It was FTX’s responsibility to keep a ledger tracking the underlying customer assets, a common setup for firms that aren’t banks themselves. Silvergate wouldn’t have had visibility into the omnibus account to know whether FTX or its underlying customers were moving assets, people familiar with the relationship said. FTX has halted withdrawals, and Silvergate has told customers it cannot take direct requests to withdraw from the FTX accounts.
My Fears
-Contagion of FTX could spill over into this stock ...
- It is the second-most heavily shorted regional bank
-“No bank in the world can honor every deposit held on its balance sheet with cash” - analyst Michael Perito
- Bank of America Quote “After [third-quarter] earnings, we posed the question: ‘Is the worst behind them?’” Bank of America analysts wrote in downgrading the stock. “We were wrong.”
- Morgan Stanley has once again lowered its 2023 EPS estimate for Silvergate Capital (NYSE:SI), arguing that the digital asset-focused bank faces a "wide range of outcomes and risks" from the demise of crypto exchange FTX.
- Silvergate (SI) disclosed last week that its average quarter-to-date digital customer deposits slid to 9.8B (excluding FTX deposits) as of November 15 from 11.9B on September 30.
- Manan Gosalia, an equity analyst at Morgan Stanley, estimated that Silvergate's (SI) digital deposit balances for quarter-end will drop further to 55B So this would mean they are down 64% in deposits from the start of the year…
- Founder of EOS Developer Block.One Buys 9.3% of Crypto Bank Silvergate ... Why does the company need to sell nearly 10% of its equity? It seems a very coincidental time to be selling stock. Does it need to raise capital?
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