SI - Silvergate Capital Might Be Going Out of Business So Why Are Shares Blasting Higher Today?
2023-03-24 12:47:48 ET
Shares of Silvergate Capital (NYSE: SI) have skyrocketed today, despite the fact that the crypto bank announced earlier in March that it plans to wind down its operations and liquidate its assets after experiencing a significant deposit run over the last several months. As of 12:07 p.m. ET, the stock was up 63%.
Silvergate is one of three U.S. banks that collapsed earlier this month. The bank ran a real-time payments network that allowed multiple parties on the network to clear and settle U.S. dollar transactions in real time. This helped facilitate crypto trading and crypto-related transactions because the U.S. banking system largely operates on a lag.
However, when the allegations about FTX came to light, Silvergate faced a crisis of confidence because FTX had been a large client. The bank saw intense deposit outflows in the fourth quarter of 2022 and in Q1 of this year, forcing it to sell bonds while they were trading at a meaningful loss, which wiped out a significant portion of shareholder equity. Silvergate also appears to be facing potential regulatory issues.
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Silvergate Capital Might Be Going Out of Business, So Why Are Shares Blasting Higher Today?