Silvergate Capital Denies Liquidity Crisis, Considers Exposure to Bankrupt BlockFi Minimal
San Diego-based Silvergate Capital Corporation rejected claims of suffering significant exposure to the bankrupt BlockFi.
In a statement released hours after BlockFi confirmed filing for Chapter 11 bankruptcy, Silvergate declared its deposit relationship with the embattled crypto lender was hardly $20 million. The update conveyed via its website indicated that the exposure was minimal relative to the $13.2 billion in deposits in the third quarter it held from digital asset clients.
The statement further disclosed that Silvergate Capital had never engaged BlockFi as the custodian for the bitcoin-collateralized loans. The announcement shared via Twitter denied rumors of Silvergate’s huge investment in BlockFi.
SEN Loans Performance Lauded
Silvergate chief executive Alan Lane reassured investors that the bitcoin-collateralized SEN loans met expected performances without incurring losses or mandatory liquidations. Lane remarks targeted to quell investors’ jitters following speculations of Silvergate concealing huge losses in the wake of BlockFi bankruptcy filing.
Lane offered a recap of the exposure in BlockFi as immaterial since Silvergate has the priority lien. Besides, it has a security interest in a $10 million cash collateral account seconding SCH services extended to BlokFi.
The chief executive reiterated that Silvergate’s business model is purpose-built to withstand volatility and that the SEN leverage loans were operating as designed. He echoed previous briefings to remind customers to seek assistance from support teams available 24/7 during the ongoing adversity.
Addressing Speculations Regarding Silvergate’s Financial Health
Lane lamented that the factual exposure in Block is obscured by guesses and rumors that spread falsehood regarding the financial health of the institutional crypto service provider. He condemned the misleading statements as ignorant of facts revealed in recent press releases and captured in the quarterly report filings on the Securities and Exchange Commission (SEC) website.
The chief executive remark cast response to Swiss investor Walter Bloomberg as lacking evidence in the recent tweet that Silvergate Capital lend money to crypto lender firm BlockFi now facing a liquidity crisis. The source of fear, uncertainty and doubt locking Silvergate Capital garners steam from BlockFi, acknowledging liabilities of $1 billion to $10 billion were owed to over 100000 creditors. Earlier in November, the Wall Street Journal reported Silvergate refuting claims of battling contagion fears.
As seen on Yahoo Finance, the speculations adversely affect the crypto bank stock (SI), where the price is 11.1% down in a day to exchange at $25.9.
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