While the crypto-friendly bank put off filing its 10-K report with the SEC on Wednesday, Silvergate’s shares fell after hours.
After-hours trading on Wednesday saw a sharp decline in Silvergate’s stock after the cryptocurrency-friendly bank put off publishing its 10-K report with the SEC. whole details.
Bitcoin news involving the SEC: Silvergate delays
The parent company of Silvergate Bank, Silvergate Capital Corporation, informed the US Securities and Exchange Commission on Wednesday that it would postpone the submission of its annual 10-K report because it needed more time to complete certain audit processes with a third-party auditing firm.
In the filing, Silvergate also listed a number of events that will have a negative influence on when the 10-K report will be released.
Included in these are the sale of further investment securities above and above that which was initially anticipated and announced in the company’s earnings statement, as well as the sale of additional debt securities in January and February 2023, from which Silvergate anticipates further losses.
According to Silvergate, this is the case:
The Corporation and its wholly owned subsidiary, Silvergate Bank, may not be adequately capitalised as a result of these new losses, which may negatively affect their required capital ratios.
At Wednesday’s closing bell, Silvergate (SI) stock was trading at $13.53. But, following the revelation, the price fell as much as 31.7% in after-hours trading, dropping far below $10.
Situation at Silvergate: impacted by the failure of FTX
In the last quarter of 2022, Silvergate announced a net loss of $1 billion and a decline in client deposits of around $14 billion, blaming the projected reduction in bank deposits of digital assets as well as general instability in the market.
After the FTX collapse, bank deposits were rattled, causing the corporation, according to company filings, to apply for a $4.3 billion loan from the Federal Home Loan Bank (FHLB) in January and sell around $5.2 billion in debt instruments.
As much as 71% of the company’s shares are available for investors to purchase and sell as short positions, according to MarketWatch, making Silvergate, which was the target of a class action lawsuit alleging that it helped FTX’s fraudulent actions, one of the hottest selling companies on Wall Street.
Silvergate also stated that he is now reviewing several ongoing regulatory and other inquiries and investigations pertaining to the Company in his filing with the SEC on Wednesday.
In view of the present commercial and regulatory obstacles, Silvergate continued, it is actively revising its actions and strategies.
The SEC’s view of cryptocurrency: emphasise Bitcoin
A lot of talk has recently around an interview that former SEC Chairman Gary Gensler gave to New York Magazine, in which he said that all cryptocurrencies, with the exception of Bitcoin, may be compared to security tokens.
The FTX case, the crypto winter, and the present situation of the cryptocurrency markets were all discussed in the interview. The section on cryptocurrencies, security tokens, and Bitcoin is, nevertheless, the most intriguing.
All cryptocurrencies, with the exception of Bitcoin, would be securities, according to Gensler. This sentence in particular generated controversy because Bitcoin and other cryptocurrencies like Ethereum and Litecoin appear to be quite similar.
Gensler nonetheless outlined his justification. Namely arguing that the SEC already has all of the legal resources necessary to interfere in the crypto markets.
This is in part because he thinks that, with the exception of Bitcoin spot transactions and cryptocurrency payments for products and services, almost all forms of cryptocurrency transactions currently fall under the SEC’s purview.
He asserts that organisations, foundations, or people may be behind some cryptocurrencies, and that these entities have up to this point only used a variety of intricate and legally ambiguous procedures to advertise their coins and entice investors with promises of profit.
On the other hand, no one is now supporting Bitcoin and no one is advertising its sale by making financial promises. Also, commodities can be freely sold on the market in a completely legal manner.
In contrast, securities must only be presented to the public in conjunction with a prospectus that has been approved by organisations like the SEC in order for them to be lawfully sold.
For cryptocurrencies, neither a prospectus like that nor SEC clearance exist. As a result, cryptocurrencies that are unregistered securities in the US will no longer be able to be offered lawfully without a prospectus that has been authorised by the SEC. Afterwards, similar events can occur in other jurisdictions as well.