MicroStrategy Claims Minimal Exposure as Crypto.com, Coinbase, and Gemini Pause Transactions with Silvergate Bank – What's Going On?
MicroStrategy has denied any meaningful exposure to Silvergate as crypto firms who banked with the crypto bank are rushing for the exits amid concerns about its financial condition.
In a Thursday tweet, business intelligence firm MicroStrategy said their Bitcoin holdings, which consists of over 130,000 Bitcoin (worth $2.9 billion), are not custodied with Silvergate. The company also said they have no other financial relationship with the embattled crypto bank.
The Michael Saylor-founded firm disclosed that it has a loan from Silvergate, adding that it will not need to pay back the loan until Q1 2025 and that a bankruptcy or insolvency event wouldn’t “accelerate” the loan repayment.
The news comes after Silvergate announced earlier this week that it won't be able to file its annual financial report to the SEC on time and that it is evaluating its ability to stay in business. The bank's shares fell more than 55% Thursday following the announcement.
Silvergate is a traditional, federally insured lender that has positioned itself as a gateway to the crypto sector. It offers a 24/7 payments platform, named Silvergate Exchange Network, which has reportedly processed over $1 trillion in transactions since 2017.
Silvergate was among the lenders hit hardest by the fall of FTX in November last year. As reported, Silvergate suffered a bank run following the collapse of FTX and had to sell $5.2 billion of debt securities it was holding on its balance sheet at a significant loss to cover around $8.1 billion in user withdrawals.
As a result, it incurred a $718 million loss, which reportedly exceeds the bank’s total profits since 2013. Furthermore, Silvergate had only $3.8 billion of deposits at the end of 2022, compared to $11.9 billion
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