Silvergate Capital Seeks US Congress Aid to Avoid Bankruptcy

8. March 2023 0 Comments

• Silvergate Capital is reportedly in talks with the US Federal Deposit Insurance Commission (FDIC) to seek help amidst its financial woes.
• The FDIC is considering aiding the lender by getting prominent crypto market participants to invest or possibly taking it over through a receivership arrangement.
• Silvergate Capital’s stock price has plummeted 69.83% YTD, and many of its previous clients have abandoned it amid investigations from US authorities.

Silvergate’s Financial Woes

Silvergate Capital is one of the numerous victims of the disgraced Sam Bankman-Fried’s FTX exchange collapse, leading to a bank run on the lender and employee layoffs as well as selling off assets at a loss to salvage the situation. In January, the embattled lender reported a $949 million loss in its Q4 filing with the US Securities and Exchange Commission (SEC), with the company announcing suspension of its Series A stock dividend payouts to investors as part of efforts to preserve capital. The ongoing investigations into Silvergate Capital by US authorities have further worsened their crisis, leading their stock price down by 69.83% YTD at time of writing.

Turning To Congress For Help

Silvergate Capital recently received officials from United States Federal Deposit Insurance Corporation (FDIC) at their California office in order to deliberate on ways they could overcome their deepening financial crisis and avoid going bankrupt. According to sources close to this matter, examiners from FDIC suggested that one possible path for them could be getting prominent crypto market participants to invest in Silvergate, or if that fails, FDIC could takeover Silvergate through a receivership arrangement and possibly merge it with another more viable lender. No decision has been made so far however.

The Collapse Of FTX & Alameda

The sudden collapse of FTX and Alameda last year was one major cause of Silvergate’s financial woes since they had close ties with both companies; which prompted many crypto market participants who previously did business with them (Coinbase & Circle) abandoning them amidst all these issues they are facing currently.

Preserving Capital

In order for them to preserve capital during this time, they had announced suspension of their Series A stock dividend payouts as part of their efforts towards salvaging this situation they find themselves in currently; this announcement also included employee layoffs which were necessary for them achieving this goal too .

Unending Challenges

It remains unknown whether or not Silvergate would be able overcome all these unending challenges thrown before it; only time will tell if following any advice given by FDIC will bring about positive results for them or not