- Silvergate Capital Corp says it has decided to wind down operations.
- The crypto company will liquidate the Silvergate Bank as well.
- Silvergate stock is now down close to 75% versus the start of 2023.
Shares of Silvergate Capital Corp (NYSE: SI) crashed about 40% in extended hours on Wednesday after the crypto bank confirmed that it has decided to wind down operations.
Silvergate to liquidate the ‘Bank’ as well
The announcement arrives about a week after Silvergate Capital Corp delayed the submission of its annual 10-K report. In a press release today, it also revealed plans of liquidating the Silvergate Bank.
In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward.
The California-based company has been struggling for a while and opted to lower its headcount by 40% in January. Versus the start of the new year, Silvergate stock is now down close to 75% at writing.
Silvergate discontinues its crypto-payments network
Silvergate Capital Corp has picked Centerview Partners LLC as its financial advisor while Cravath, Swaine & Moore LLP will act as its legal advisor through the process. The press release also reads:
Bank’s wind down and liquidation plan includes full repayment of all deposits. The Company is also considering how best to resolve claims and preserve the residual value of its assets.
Last week, the crypto company discontinued one of its core offerings – the Silvergate Exchange Network (SEN) but clarified that its other deposit-related services were still operational.
Silvergate currently has more than $11 billion in total assets. It’s the only crypto bank other than its bigger rival Signature Bank that has over $114 billion instead.
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The stock price of Silvergate Media just crashed again this past week, leading to further concern among investors. While the company has seen ups and downs over the past year, this latest stock crash has left many wondering why the company’s shares were so severely affected.
To begin with, some analysts believe the stock crash was caused by the company’s reliance on content licensed from Chinese companies. While Chinese licensing has often been a major source of revenue for media and entertainment companies, the slowing Chinese economy has caused some concern among investors regarding Silvergate’s dependence on this source of revenue.
Furthermore, Silvergate Media’s stock was also affected by news of a possible merger between its main competitor, HIT Entertainment, and a larger competitor, Hasbro. The merger could potentially cause Silvergate to lose market share in the media and entertainment sector, leaving investors worried about Silvergate’s future prospects.
Finally, some analysts have suggested the stock crash was impacted by recent news about Silvergate’s producing and broadcasting a new children’s television series. As the company does not have a long history of producing television shows, investors were concerned about the company’s ability to be successful in this venture.
Despite these reasons for the stock crash, there are a few potential positives that investors should consider. Silvergate Media has a strong brand and a loyal fanbase, meaning that the company’s long-term prospects are still good. Furthermore, the company is also working to strengthen its core business and expand its reach, meaning that the stock could bounce back in the future.
Overall, it is impossible to predict how anyone company will fare in the stock market in the long-term. Despite the recent stock crash, investors should keep in mind the positives about Silvergate Media and consider the company for their portfolio in the future.
