Silvergate CEO calls out ‘short sellers’ spreading misinformation

Silvergate Capital CEO Alan Lane has slammed “quick sellers” and “different opportunists” for spreading misinformation over the previous few weeks — simply to attain themselves a fast buck. 

In a Dec. 5 public letter, Lane stated there was “loads of hypothesis – and misinformation” being unfold by these events to “capitalize on market uncertainty” prompted partly to FTX’s catastrophic collapse in November.

His crypto-focused financial institution was recently forced to deny one in every of these so-called FUD (worry, uncertainty and doubt) campaigns final week when there was hypothesis that the agency was uncovered to the bankrupt crypto lender BlockFi.

Lane additionally used the newest letter to the general public as an “alternative to set the file straight” about its funding relationship with FTX, in addition to the corporate’s “sturdy threat administration strategy.”

“Silvergate carried out important due diligence on FTX and its associated entities, together with Alameda Analysis, each through the onboarding course of and thru ongoing monitoring, in accordance with our threat administration insurance policies and procedures.” Learn extra right here: https://t.co/9nAViJOzoi

— Silvergate Financial institution (@silvergatebank) December 5, 2022

Lane reiterated that the agency complies with the Financial institution Secrecy Act and the USA PATRIOT Act, which requires it to observe and scrutinize “each account,” together with FTX and Alameda analysis.

“Silvergate carried out important due diligence on FTX and its associated entities together with Alameda Analysis, each through the onboarding course of and thru ongoing monitoring,” the CEO defined.

The CEO has additionally touted the agency’s “resilient steadiness sheet and ample liquidity” including that prospects’ deposits are “safely held.”

“Along with the money we feature on our steadiness sheet, our whole funding securities portfolio may be pledged for borrowings on the Federal Dwelling Mortgage Financial institution, different monetary establishments, and the Federal Reserve Low cost Window – and may finally be bought ought to we have to generate liquidity to fulfill buyer withdrawal request,” defined Lane.

Associated: Block.one and its CEO become largest Silvergate Capital shareholders

Silvergate has additionally been the main target of different hypothesis in latest weeks, together with CFA-issued accountant and former portfolio supervisor Genevieve Roch-Decter, who expressed doubt in a Dec. 1 put up whether or not Silvergate may preserve its liquidity place and contemplated whether or not it may endure from its shut relationship with FTX.

Roch-Decter was additionally involved with Silvergate’s Bitcoin-collateralized mortgage place, which may impression the agency’s steadiness sheet if Bitcoin’s (BTC) value continues to fall.

She additionally expressed fear that ought to the agency’s Silvergate Change Community — a community utilized by extremely used crypto exchanges to ship U.S. {dollars} and Euros between accounts — was compromised, it may “drag down the whole system.”

The Silvergate Change Community permits the financial institution’s digital forex and institutional investor purchasers to ship U.S. {dollars} and euros between their Silvergate accounts and the accounts of different Silvergate purchasers.

Right here’s a graphic the corporate shared in February: pic.twitter.com/RKGLq1ZTSg

— Genevieve Roch-Decter, CFA (@GRDecter) November 30, 2022

Lane confirmed within the assertion that Silvergate “prospects proceed to have entry to their U.S. greenback deposits after they want them and that Silvergate Change Community (SEN) has continued to function uninterrupted all through this era.”

“We deliberately carry money and securities in extra of our digital asset-related deposit liabilities,” the CEO added.

Lane’s public letter did little to stem the bleeding of Silvergate’s (SI) share value, which fell 8.49% to $24.24 on the New York Inventory Change (NYSE) on Monday, according to MarketWatch.

Silvergate’s inventory is now down 52.43% during the last thirty days and decreased 85.34% during the last 12 months.