• Silvergate Capital Corp (NYSE: SI) stock has been cut nearly in half after it delayed the submission of its annual 10-K report.
• JPMorgan downgraded Silvergate stock to underweight due to liquidity challenges, and Canaccord Genuity also downgraded the stock and trimmed their price target.
• Coinbase also announced that it had stopped payments to or from the crypto bank.
Silvergate Stock Crashes 50%
Silvergate Capital Corp (NYSE: SI) saw its stock take a major hit on Thursday, as it was cut nearly in half after delaying its annual 10-K report submission. JPMorgan downgraded Silvergate’s stock to „underweight“ due to liquidity challenges, while Canaccord Genuity also downgraded the stock and trimmed their price target o $9.0 a share. Furthermore, Coinbase announced that it had stopped payments to or from the crypto bank.
Reasons Behind The Crash
The crypto bank is facing an existential crisis following the FTX fiasco in early November. On Tuesday, Silvergate Capital said in a filing with the U.S. Securities and Exchange Commission (SEC): The Company is evaluating its ability to continue as a going concern [and] is in the process of reevaluating its businesses and strategies in light of the business and regulatory challenges it currently faces. The lender also confirmed that it had to offload more assets than expected over the past two months, which could weigh on its capital ratio. Additionally, short sellers may have contributed to this bank run as Silvergate reported much greater level of deposit outflows than anticipated in Q4 2020.
On Thursday, JPMorgan analyst Steven Alexopoulos downgraded Silvergate’s financial services company citing continued liquidity challenges: In the backdrop of challenged environment, short-sellers appear to have contributed to a bank-run of sorts with Silvergate reporting a much greater level of deposit outflows than anticipated in Q4 and this likely continuing…In its latest reported quarter, Silvergate Capital had $1 billion loss.
Canaccord Genuity Downgrade
Analysts at Canaccord Genuity also downgraded Silvergate Capital on Thursday and further trimmed their price target o $9 per share due to liquidity issues faced by the company recently.
Coinbase Stops Payments To/From Crypto Bank
Coinbase announced today that it had stopped payments involving transactions with or from SilverGate Bank due to concerns about traders withdrawing funds too quickly thus leading them into bankruptcy protection or insolvency risk scenarios if they become unable meet obligations set by regulators such as KYC/AML requirements etc..