Throughout the FTX chaos, we have been watching Silvergate, a regulated U.S. crypto bank closely and opportunistically. Caught up in the collateral damage from FTX's implosion, Silvergate, plunged as low as $24 per share down from highs of $60 earlier this year, as cash continues to pour out of the space.
But apparently we haven't been the only ones watching the name opportunistically. One of the creators of the EOS blockchain and one of the "richest men in crypto", Brendan Blumer, has just bought a 9.3% stake in the bank, according to CryptoNews.
This makes him the largest shareholder of the bank. Additionally, his EOS development firm, Block.one, also owns a 7.5% stake in the bank. Combined he controls about 17% of the bank. Block.one put out a press release about their stake in the bank calling it a “proven track record of maintaining a liquid and conservative balance sheet investment portfolio.”
They all said: “We believe Silvergate’s current equity prices do not accurately reflect their strong balance sheet, their strategic positioning, or their market-defiant growth trajectory, and therefore offers a unique investment opportunity. We are excited to be a new passive shareholder."
Like us, they are probably betting that when the smoke clears from the FTX pain, Silvergate - who, again, is a U.S. regulated bank - will emerge not only little scathed, but potentially with its shares closely held, setting up potential for a swing higher in price again.
On top of that, via Bloomberg, we see that Citadel has added 280,000 shares of the name and now holds 392k shares, or about 1.25% of the company.
Recall, days ago, we reported that FalconX had resumed its use of Silvergate's services after a brief pause.
"Concerns have abated," the platform told its clients in a memo. The halting of use of Silvergate was consistent “with our standard process to pause and reassess operations in these scenarios," the company wrote, according to a Tuesday morning Bloomberg note.
And recall about a week ago Silvergate confirmed it had little exposure to the FTX blowup. Alan Lane, Chief Executive Officer of Silvergate, said:
“In light of recent developments, I want to provide an update on Silvergate’s exposure to FTX. As of September 30, 2022, Silvergate’s total deposits from all digital asset customers totaled $11.9 billion, of which FTX represented less than 10%. Silvergate has no outstanding loans to nor investments in FTX, and FTX is not a custodian for Silvergate’s bitcoin-collateralized SEN Leverage loans. To be clear, our relationship with FTX is limited to deposits."
The company then confirmed that the rest of its leveraged loans and banking infrastructure was safe:
“To date, all SEN Leverage loans have continued to perform as expected with zero losses and no forced liquidations. As a reminder, all SEN Leverage loans are collateralized by Bitcoin, and we do not make unsecured loans or collateralize SEN Leverage loans with other digital assets.”
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