Silvergate is seeing growing FUD, but are investors justified in panicking?
. Besides closing Wednesday's trading session at a 2.773% loss, it slipped further by close to 30% on the pre-market today.
In what is looking like another possible bank run just like that which pushed bankrupt crypto trading firm FTX Derivatives Exchange into a damning liquidity crunch last November, leaders in the digital currency ecosystem are already advising the bank's customers to withdraw their funds. Lots of chatter on Silvergate being in imminent danger. If you still hold cash there, I’d pull that immediately.The loss in investor confidence came from the failure of the company to file its Form 10-K for the previous fiscal year. According to a filing, the firm said it is currently conducting analysis, recording journal entries related to subsequent events and completing management's evaluation of internal controls over financial reporting.
This excuse is considered unwholesome by analysts, a signal that something may not be balanced in the firm's books. This will not come as a surprise, though, as Silvergate Bank had a major working relationship with FTX. The firm had clarified that its relationship is limited to deposits, but with prying eyes from regulators, the discomfort among investors is growing.
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