• Silvergate, a struggling crypto bank, recently delayed its 10-K filing leading to major shockwaves in the crypto market.
• Microstrategy took to Twitter to assure investors of its minimal exposure to Silvergate and that their loan will not be accelerated due to insolvency or bankruptcy.
• FTX’s collapse caused Silvergate and the whole crypto market to go into tailspin with partners like Coinbase, Circle, Paxos, Galaxy and CBOE distancing themselves from the company.
Silvergate – A Struggling Crypto Bank
Silvergate is a struggling crypto bank that has been on some sort of life-support since FTX (one of its biggest partners) collapsed leaving it and the entire crypto market in tailspin. After news of a later-than-usual 10-K filing sent shockwaves through its stocks and the crypto market as a whole, major cryptos tumbled by 5% in the daily time frame.
Microstrategy Reassures Investors
In response to investor concerns over possible losses, Microstrategy took to Twitter with an assurance of its “minimal exposure” to Silvergate. The company explained that even if Silvergate became insolvent, their $205 million loan wouldn’t be accelerated due to it being custodied elsewhere as opposed to with Silvergate itself. This assurance did little however; major cryptos still dropped by 5%.
FTX Collapse Sparks Concerns for Crypto Market
The collapse of FTX sparked concerns about another cataclysmic event for crypto with some going as far as calling probable bankruptcy of Silvergate “the second FTX”. In response, industry giants like Coinbase, Circle, Paxos, Galaxy and CBOE released statements regarding their respective exposures while Circle stated they are “unwinding certain services with them [Silvergate] and notifying customers”.
Microstrategy: Potential Spillovers Ahead
Since the bank has been running on deficit ever since suffering an $8.1 billion bank run last year , it received loans amounting up at $3.6 billion from the Federal Reserve Bank of New York which makes up for most of its assets now. With this in mind there is potential for further spillovers ahead should things get worse for Silvergate – something Microstrategy wants no part in given their current reassurances towards investors on Twitter .
In conclusion it seems that events surrounding Silvergate may have only just begun as more companies distance themselves from what looks like potential disaster waiting ahead . It remains uncertain how this would affect other companies involved with cryptocurrencies but one thing is sure – everyone will be watching very closely what happens next .