The CEO of Silvergate has reassured customers that their funds are safe, but many remain wary. The company had exposure to both BlockFi and FTX through deposits.
Crypto bank Silvergate is making attempts to reassure customers that its funds are safe, despite having exposure to BlockFi and FTX. The company’s CEO Alan Lane published a public letter that sought to quell any concerns about its finances.
In the letter, Lane states that “plenty of speculation” and “misinformation” was being spread by short sellers and opportunists. He called the letter an opportunity to set the record straight. The CEO says that Silvergate conducted “significant due diligence” on FTX and sister company Alameda Research.
He goes on to say that the company has a resilient balance sheet and ample liquidity. Lane’s letter reads,
“…customers’ deposits are, and have always been, safely held. In addition to the cash we carry on our balance sheet, our entire investment securities portfolio can be pledged for borrowings…and can ultimately be sold should we need to generate liquidity to satisfy customer withdrawal request. We intentionally carry cash and securities in excess of our digital asset related deposit liabilities.”
The relationship between Silvergate and FTX appears to be limited to deposits. FTX represented 10% of Silvergate’s total deposits of $11.9 billion from digital asset customers.
The crypto bank also has exposure to BlockFi, which also filed for bankruptcy recently. The latter had $20 million in customer deposits with respect to the latter.
As a result of the news, Morgan Stanley has downgraded the rating of Silvergate’s shares to underweight from equal weight. The company’s shares have dropped by 8.49% in the last 24 hours.
Silvergate Claims Limited Exposure to BlockFi and FTX
Silvergate Capital has taken a double blow from the recent collapse of crypto markets, with exposure to BlockFi and FTX.
Its BlockFi exposure is limited to $20 million, and the press release stated that it was “the subject of false and misleading statements.”
This year, it endured earlier market routs with no bitcoin-backed loans liquidated.
In its statement on its exposure to FTX, Silvergate reiterated what was said in CEO Lane’s letter. As is the case with other crypto companies, time will offer more information on the bank’s financial state. For now, it appears that Silvergate is protected against the bankruptcies of FTX and BlockFi.
Creating a Stablecoin Service With Diem
Silvergate is perhaps best known for purchasing Meta’s failed Diem network. The social media giant finally gave up on its stablecoin project following scrutiny, and the crypto bank purchased its assets. The crypto bank acquired Diem for $182 million.
Silvergate said that the Diem project would serve as the basis for a proprietary stablecoin payment service to be launched this year. However, the crypto winter appears to have stalled that effort, with no updates on the development.
Trusted
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
