Joshua Jake
Joshua Jake 6 minutes reading from Bitcoin

Can Silvergate Destroy the Crypto Industry and Send $BTC to $3K?

Can Silvergate ruin the Crypto industry and send BTC to 3,000?

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Bitcoin Silvergate crypto FTX

SilverGate (SG) is a US federal charter bank. Their clientele is primarily crypto based entities. Examples are exchanges like FTX, Genesis, institutional investors such as Micostrategy and Stablecoin issuers.

The Silvergate Exchange Network (SEN) enables their digital currency and institutional investor clients to send U.S. dollars and euros 24 hours a day, 7 days a week, 365 days a year between their Silvergate accounts and the accounts of other Silvergate clients.

Here is where this quickly turns supect. On 11/11 their company released a statement in their website claiming FTX made up <10% of their deposits.

This is where the problem begins⬇️⬇️⬇️

SG is required by LAW to follow AML and KYC rules. Banking for FTX means they coherently knew that they were facilitating customers depositing into FTX thru Alameda. This is confirmed by SBF and means billions of are unaccounted for.

What do you think happens when enforcement follows the money? Obviously SG could potentially face litigation.

Silvergate Capital has since seen its stock plummet in the wake of the FTX meltdown.

This is because the deposits are essentially what drives revenue + earnings as well as Silvergate also issuing lines of credit to companies that are collateralized by Bitcoin, SEN Leverage.

But here is where it gets weird. ⬇️

2 days after the FTX scandal the CEO of SG fires their Chief Risk Officer. Which isn’t weird until you realize he was the CEOs son in law..

A few days later one of their clients

Falcon X releases a statement that they will be Extremely Cautious and now avoid SG. 4 days later they reopen the use of SEN network..

Then on November 29th is gets intense..⬇️⬇️⬇️

Just in: Law Offices of Howard G. Smith announces an investigation on behalf of Silvergate Capital Corporation (“Silvergate” or the “Company”) (NYSE: SI) investors concerning the Company’s possible violations of federal securities laws.

Deposits are draining, risks are rising and clients are folding with more to be rumored to file bankruptcy like genesis holdings. The CEO barely speaks and claims everything is simply mis information stating the only truth is found on their website with very vague responses ⬇️

Potential Blackswan? In my opinion the situation is very sketchy and I would keep a close eye on the outcome of these investigations. From a company perspective SG could be completely fine and still has decent balance sheet. However I believe there is likely more pain ahead ⚠️

This post is based on this twitter thread.

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