Silvergate Capital Corp, one of the most cryptocurrency-friendly banks in the US, has delayed its annual earnings call and may not be capable of meeting extended deadlines due to ongoing investigations and internal audits, the company stated on Wednesday.
In a filing with the Securities and Exchange Commission, the California-based company announced that it is “unable” to file its annual earnings report as expected, even after receiving an extension until March 16.
Silvergate has requested additional time to allow for an audit, including “the evaluation of the effectiveness of the company’s internal control over financial reporting”.
It is also “analysing certain regulatory and other inquiries and investigations” pending with the company.
Though specific details were not disclosed, a bipartisan group of US senators featuring Democrat Elizabeth Warren and Republicans Roger Marshall and John Kennedy put pressure on the bank, asking whether it knew about the alleged misuse of customer funds by collapsed crypto exchange FTX.
Silvergate Capital pressured by Elizabeth Warren
The group sent a letter to Silvergate chief executive Alan Lane enquiring into the company's ties to FTX after previous answers to a related inquiry were "evasive and incomplete", according to a Bloomberg report.
FTX’s founder and former head Sam Bankman-Fried is accused of siphoning users’ funds out of FTX and into sister company Alameda Research, with some of those funds potentially routed through accounts that Alameda had with Silvergate.
Massive losses expected
Silvergate’s preliminary unaudited results for the year as announced on January 17 underscored a net loss attributable to common shareholders of US$949mln compared to net income available to common shareholders of $75.5mln in the year prior.
Yesterday’s disclosure suggested that “these additional losses will negatively impact the regulatory capital ratios… and could result in the company and the Bank being less than well-capitalized”.
Silvergate admitted that these losses may impact its ability to operate “as a going concern” in the year ahead.
Silvergate shares on the New York Stock Exchange tanked over 40% in Thursday’s pre-market trading session, bringing year-to-date stock market losses above 55%.