Crypto Companies Take a Hit Following Silvergate Bank’s Closure


© Reuters. FILE PHOTO: Representations of cryptocurrencies are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration

(Reuters) – The crypto industry was dealt a blow on Thursday as Silvergate Capital (NYSE:) Corp revealed plans to discontinue its operations and voluntarily liquidate, a result of FTX’s implosion last year.

Shares of the crypto lender nosedived 45% to $2.86, the day after reaching an all-time low and plummeting 64% since they flagged a going concern risk on March 1. Meanwhile, shares of Signature Bank (NASDAQ:), which uses blockchain technology, dropped 9%.

Crypto exchange Coinbase (NASDAQ:) Global, which disassociated with the bank last week, saw its shares slide 3%. Miners Riot Blockchain (NASDAQ:) and Marathon Digital also experienced losses of 3.5% and 4%, respectively.

Cryptocurrency prices steadied near the $21,647 mark, the lowest since mid-February, with experts and investors noting that the market impact was minimal as the news had been widely anticipated.

Silvergate’s announcement adds to a string of high-profile collapses of crypto market players in recent months.

Silvergate shares have tumbled 95% in the past 12 months, and 72% this year, resulting in shorting being a lucrative venture for bearish investors.

Almost 85% of the company’s free float is under short position, with short sellers raking in $241 million in year-to-date mark-to-market profits, which is an 81.9% increase from an average short interest of $294 million, as per analytics firm S3 Partners’ report from Monday.

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