Cryptocurrency-focused bank Silvergate Capital Corp. has decided to delay the filing of its annual report to give the company ample time to assess its viability and ability to run its operations. Consequently, Silvergate stock price dropped by almost 31% after the news went public. The document which was supposed to be filed is known as the 10-K, required by the United States regulators.
The Securities and Exchange Commission (SEC) requires this document to fully assess and understand a business and its health status in terms of finance. As it stands, Silvergate Capital is asking for additional two weeks to fix the annual report for the 2022 fiscal year. Bitcoin (BTC) mining company Marathon Digital Holdings faced a similar fate a few days ago when it had to postpone the publication of its financial reports.
Silvergate Capital Corp. went on to talk about regulatory scrutiny and the fact that its accounting firm and independent auditors are requesting information.
“The company is currently analyzing certain regulatory and other inquiries and investigations that are pending with respect to the company,” a Wednesday filing by Silvergate stated. “The company’s independent registered public accounting firm is also requesting detailed information relating to such matters and the company is responding to such requests.”
Silvergate Capital Set to Record More Losses
According to Silvergate, there exists a possibility of recording more debts shortly because the company sold additional debt securities in January and February. These losses that are connected to its securities portfolio plus other factors could serve as an impediment to the company’s operations.
“These additional losses will negatively impact the regulatory capital ratios of the Company and the Company’s wholly owned subsidiary, Silvergate Bank, and could result in the Company and the Bank being less than well-capitalized,” and “the Company is evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements.”
Furthermore, the case with the Department of Justice (DoJ) over its connection with FTX and its sister trading firm Alameda Research was also mentioned. Several allegations were raised against the California-based crypto bank for its involvement with FTX after which the Justice Department began to probe the firm. The focus of the watchdog’s investigation is Silvergate’s equity tied to FTX and its other businesses.
