Alan Lane, CEO of Silvergate Capital, has criticized “short sellers” and “other opportunists” for distributing false information over the past several weeks in an effort to make a quick profit.

In a letter made public on December 5, Lane said that these parties were “plenty of speculating – and misinformation” to “capitalize on market uncertainty” brought on in part by FTX’s disastrous failure in November.

When there was suspicion that the company was exposed to the insolvent crypto lender BlockFi, his crypto-focused bank was recently obliged to refute one of these so-called FUD (fear, uncertainty, and doubt) tactics.

In addition, Lane utilized the most recent letter to the public as a “opportunity to clear the air” regarding its investment partnership with FTX and the business’ “robust risk management methodology.”

“Silvergate conducted significant due diligence on FTX and its related entities, including Alameda Research, both during the onboarding process and through ongoing monitoring, in accordance with our risk management policies and procedures.” Read more here: https://t.co/9nAViJOzoi

— Silvergate Bank (@silvergatebank) December 5, 2022

Lane reaffirmed that the company adheres to the USA PATRIOT Act and the Bank Secrecy Act, which call for it to monitor and carefully examine “each and every account,” including FTX and Alameda research.

“Silvergate conducted significant due diligence on FTX and its related entities including Alameda Research, both during the onboarding process and through ongoing monitoring,” the CEO explained.

The CEO has also touted the firm’s “resilient balance sheet and ample liquidity” adding that customers’ deposits are “safely held.”

“In addition to the cash we carry on our balance sheet, our entire investment securities portfolio can be pledged for borrowings at the Federal Home Loan Bank, other financial institutions, and the Federal Reserve Discount Window – and can ultimately be sold should we need to generate liquidity to satisfy customer withdrawal request,” explained Lane.

Genevieve Roch-Decter, a former portfolio manager and CFA-issued accountant, questioned whether Silvergate could maintain its liquidity position in a post on December 1 and whether it might suffer as a result of its close ties to FTX. Other speculators have also focused on Silvergate in recent weeks.

Roch-Decter was also concerned about Silvergate’s position in a Bitcoin-collateralized loan, which might have an effect on the company’s financial sheet if the price of Bitcoin (BTC) keeps dropping.

She also voiced concern that a breach in the company’s Silvergate Exchange Network, which is used by popular cryptocurrency exchanges to transfer dollars and euros between accounts, may “bring down the entire system.”

Silvergate Capital Corp is the holding company for Silvergate Bank.Silvergate Bank is a “provider of financial infrastructure solutions and services for the digital currency industry.”One of its services is the Silvergate Exchange Network.

— Genevieve Roch-Decter, CFA (@GRDecter) November 30, 2022

Silvergate customers “continue to have access to their U.S. dollar deposits when they need them,” Lane said in the statement, “and Silvergate Exchange Network (SEN) has continued to operate without interruption throughout this period.”

The CEO continued, “We purposefully carry more cash and securities than our deposit liabilities connected to digital asset holdings.

The share price of Silvergate (SI), which slid 8.49% to $24.24 on the New York Stock Exchange (NYSE) on Monday, did not respond much to Lane’s public letter, according to MarketWatch.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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