Shares in Silvergate Capital Corporation (NYSE:SI) continue to nosedive shares closed today at $5.72/share, losing over 57% of its value in a single day. Silvergate’s market capitalization is now under $200 million.
Following the news that Silvergate was unable to publish its annual report (1o-K), along with the note that it has questions about its ongoing viability, investors rushed for the door.
It did not help that several crypto firms reportedly severed their relationships with Silvergate.
Reuters reported that Coinbase had cut its ties with Silvergate, indicating it would find other financial firms to provide services. The same report stated that around 82% of the float was now short Silvergate.
Circle, issuer of dollar-based stablecoin USDC, Tweeted that they are “unwinding” certain services affiliated with Silvergate.
1/ We maintain relationships with several banking partners. We are sensitive to the concerns around Silvergate and are in the process of unwinding certain services with them and notifying customers. Otherwise, all Circle services, including USDC are operating as normal.
— Circle (@circle) March 2, 2023
Circle added that it had multiple settlement partners indicating Silvergate was not a single point of failure.
Silvergate has been in retreat for some time now. Once a high-flying federally chartered bank that had created a niche business where few banks sought to compete, the company has suffered from the crypto contagion, including its former relationship with bankrupt firm FTX. While Silvergate’s struggles will probably be isolated, it may cause other financial firms to rethink their relationships with crypto platforms. At the same time, bank regulators will be all over the books of Silvergate as the bank determines its next steps.