According to the reports of the Financial Industry Regulatory Authority over 72% of silvergate capital corp stock was found to be shorted last month i.e January 31, 2023. Recently, on February 9, 2023, the latest short interest reporting stated that Silvergate has now emerged as the second–most shorted stock in the United States with more than 72.5% of shares shorted.
The Silvergate Stock has been down over 87% in the past 12 months. However, the bearish settlement on Silvergate emerges from its recent earnings and legal battles that the company faced with its relationship with bankrupt companies Alameda Research and FTX.
On January 17, 2023, the bank recorded a net loss of $ 1 billion concerning common shareholders. According to the report by United States Securities and traders this crypto bank witnessed significant outflows in deposits during the last quarter. As a result, this phenomenon forced the company to seek wholesale funding and sell its debt securities for maintaining liquidity.
Reportedly, the company borrowed $3.6 billion from US Federal Home Loan Banks System to mitigate the effects of large withdrawals after the collapse of the crypto exchange FTX in November.
The bank also faced probes and lawsuits in the USA for helping FTX with fraudulent activities. It is also accused of furthering FTX’s investment fraud by violating the Securities Exchange Act of 1934. Recently, Moody’s Investors have reacted to the bank situation by downgrading the ratings of Silvergate capital and its bank to the lowest. As a result, it created a negative outlook for these organizations.