On March 1st, the stock price of crypto banks Silvergate fell more than 95% from its all-time high.
For months, financial regulators have been working to limit the exposure of banking institutions to the crypto sector. Those efforts intensified recently with the collapse of the crypto exchange FTX. Now, regulators' worst fears may come to pass as crypto-focused bank Silvergate takes a nosedive on the stock market.
The stock price began decreasing on March 1st. Initially, Silvergate's stock price was $13.5 before falling to $9.24. This means that the bank's stock price fell over 95% from its all-time high.
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Prices began falling immediately after the bank announced that it will delay the release of its Form 10-K for another two weeks. The form is an annual report that firms must submit to the US SEC showing their general financial health.
According to the bank's statement, it will use the time to assess the extent of the consequences of the 2022 crypto market crash on Silvergate. It will also use the time to evaluate whether it can continue to offer its services.
It is worth noting that the firm has already reported a $1 billion loss in the fourth quarter of 2022. Some experts believe that Silvergate’s losses could be much higher.
One of the people this stock price downfall will impact is billionaire investor Ken Griffin. A while ago, he revealed that he owned a 5.5% stake in Silvergate, valued at approximately $25 million. Ken Griffin is one of the top hedge fund managers in the world, who made over $16 billion in 2022.
The looming collapse of Silvergate will likely trigger a debate amongst regulators and lawmakers on insulating the banking system from crypto investments. In particular, authorities may be concerned about Silvergate holding federally insured deposits with over $11 billion in assets.
At the beginning of February, the United States Department of Justice (DOJ) reportedly launched an investigation into crypto bank Silvergate.
