Silvergate Marked for Collapse Within a Week
A report about a popular short seller has surfaced online. According to the report, a forecast announced the collapse of the California-based Silvergate Bank within a week, which is the most recent turn of events for the institution. Mark Cohodes is a famous gambler known to predict the collapse of many major businesses, especially in the United States.
Cohodes was said to have warned his followers about Silvergate Bank’s connections to FTX and Alameda Research for several months. He was said to have predicted that the bank’s shares would fall even further. Although the bank has recently shown a sign of distress, Cohode’s previous predictions have been said to have tensed up the situation a bit. Cohodes, before now has gotten into trouble with the FBI who have in the past harassed him for the successful predicting the collapse of some prominent companies.
It was gathered that the bank’s (Silvergate) shares have already suffered a terrible decline in value over the last six months, with prices falling by over 95%. Cohodes has previously expressed doubt about FTX, claiming that he needed to understand more of the company’s finances or its massive crypto exchange. The company collapsed few week later.
Cohode’s Methodology
Cohodes declared that he was shorting the stock in a Hedgeye video from November, which means that he would profit if the price of the shares plummeted. He declared on Friday that he was still shorting the stock and that it was even larger than it was back in November.
Many investigations are being conducted into Silvergate Bank, and many confirmed reports say that investors are suing the company. One class case uncovered by an insider claims that the bank is charged with mishandling FTX customers’ money and having “clear sight” of criminal activity at the exchange and its affiliated hedge fund Alameda Research. Another source disclosed that major bank customers accuse them of being responsible for FTX liquidation.
Meanwhile, due to its strong ties to FTX and Alameda Research, Silvergate Bank, which specializes in banking services for companies involved in the cryptocurrency industry, has been under fire from investors and regulators. From investigations gathered on this trend, the bank’s share price has suffered due to the considerable damage to its reputation.
The Situation with Silvergate
On the other hand, the bank’s management, in their usual manner, has come out to explain the situation to calm the already heated tempo. FTX and Alameda Research’s relationship with the bank has previously been defended by the CEO of the bank, Alan Lane, who also asserted that the bank operates with the highest standards of compliance and transparency.
When contacted to comment on the topic, some experts think that the Cohodes’ prediction that the bank would fail within a week comes true, it remains to be seen. Meaning that there are no enough sign that such a disruptive event will happen, the bank’s recent problems make it evident that Silvergate Bank faces a difficult path ahead.
Further revelation also showed that Cohodes had already warned his followers about FTX for several months by this current situation. There are also reasons to believe that he (Cohodes) doesn’t care much about the crypto industry, even with the massive crypto exchange’s finances and operations.
Also, following Wirecard, he had started to be wary of new companies with large offshore cash flows since, according to him, they were frequently used as a front for money laundering. In an interview with journalists, Cohodes was quoted saying that “FTX, the (Silvergate) largest client, talks about Silvergate and claims that they couldn’t operate without it; that is the time to investigate Silvergate.”
It was later discovered that Cohodes was actually referring to a statement made by Sam Bankman-Fried, a co-founder of FTX, that had previously appeared on the Silvergate website. According to Bankman-Fried, before and after Silvergate, there are two distinct periods in a crypto firm’s existence. He firmly believes that the company is just undergoing a trial stage and will prevail in a matter of time.
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