The Financial Industry Regulatory Authority reports that as of January 31, over 72% of Silvergate Capital Corp shares was shorted.
According to the most recent Short Interest Reporting dated February 9, cryptocurrency bank Silvergate Capital Corp. is the second-most shorted stock in the United States with more than 72.5% of its shares being shorted.
All equities securities' short interest holdings are compiled and published twice a month by the Financial Industry Regulatory Authority (FINRA). A short position indicates that traders and investors anticipate a decline in the value of the price of a security, such as a stock. Profiting on a security's price drop is the goal of a short seller.
In the twelve months before publication, Silvergate stock (SI) had decreased by more than 87%. The company's most recent financial report and legal disputes it has with insolvent businesses FTX and Alameda Research are the main causes of the adverse mood surrounding Silvergate.
On January 17, the bank disclosed a $1 billion net loss for the fourth quarter of 2022 that was attributable to common stockholders. The United States Instruments and Exchange Commission (SEC) said that Silvergate had large deposit withdrawals throughout the time period, forcing the business to look for wholesale funding and sell debt securities to preserve liquidity.
According to reports, Silvergate took out a $3.6 billion loan from the US Federal Home Loan Banks System to lessen the consequences of a spike in withdrawals following the failure of the cryptocurrency exchange FTX in November.
In the United States, the bank is under investigation and is being sued for allegedly helping FTX commit fraud, including lending and commingling user cash. While shareholders contend Silvergate broke the 1934 Securities Exchange Act, the business has been charged with "furthering FTX's investment fraud." The banks involvement with FTX enterprises is presently the subject of an investigation by the Justice Department.
Alameda created a bank account in 2018, before to the start of FTX, claims Silvergate. The business asserts that it did its due diligence at the time and continued to keep an eye on the matter.
Recent financial troubles prompted Moody's Investors Service to downgrade Silvergate Capital and its bank to "junk" status, with a poor outlook for both businesses.
