Citadel Securities discloses large stake in struggling Silvergate

Category: Blockchain Crypto Payments
Posted by Maria

Citadel Securities has declared a hefty 5.5% stake in troubled bank Silvergate Capital, worth around $25 million, according to a new filing with the US Securities and Exchange Commission (SEC).

Ken Griffin’s behemoth market maker disclosed that it bought up 1.6 million shares in the struggling crypto-friendly bank on Dec. 31. Silvergate suffered heavy losses and since its biggest customers, FTX and Alameda Research went bankrupt on accounts of fraud.

The bankruptcy caused a run on the bank, depleting Silvergate’s funds in the process.

Griffin made an illustrious entrance into the crypto space last year by picking up a rare copy of the US Constitution, outbidding CoinstitutionDAO. Before that, Griffin was vehemently against the sector. In fact, prior to the bear market in March, he told Bloomberg:

“Crypto has been one of the great stories in finance over the course of the last 15 years. And I’ll be clear, I’ve been in the naysayer camp over that period of time.

“But the crypto market today has a market capitalization of about $2 trillion in round numbers, which tells you that I haven’t been right on this call.”

Since then, crypto’s market cap practically halved to around $1 trillion dollars, with Bitcoin taking the lion’s share at $426 billion in market cap.

Citadel buys stake in financially troubled Silvergate

Silvergate bank posted a hefty loss of $949 million for the last quarter of 2022. It laid off 40% of staff and revealed that it expects to dish out $8.1 million in restructuring costs.

The firm has also been hit with a class action lawsuit in Dec. and came under fire for its relationship with the fraudster Sam Bankman-Fried. The lawsuit alleges Silvergate and Lane aided, abetted, encouraged and substantially assisted Bankman-Fried in jointly perpetrating a fraudulent scheme upon Plaintiff and the class.

In the last quarter of 2022, withdrawals reached a record-breaking $8 billion, with is largest customers being now-bankrupt FTX and Alameda Research.

Silvergate’s stock price is down 87% year-to-date, from $121 to $15 at the time of writing.

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