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Silvergate CEO says short-sellers spreading misinformation

by December 6, 2022
by December 6, 2022 0 comment
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Silvergate Capital Corporation (NYSE: SI) CEO Alan Lane has said short sellers and other people looking to capitalize on the latest uncertainty in crypto are the ones behind a lot of the speculation and misinformation affecting the sector.

Lane’s comments come as the industry comes to terms with the extent of the fraud committed at FTX and Alameda Research. The collapse of the two companies only added to the speculation within the industry – with many more platforms falling amid contagion.

In the market, cryptocurrencies and top crypto stocks have plummeted in recent weeks, particularly following FTX’s downfall.

Silvergate’s stock for instance is more than 52% down in the past month. The stock closed nearly 8.5% down on Monday, with the SI price at $24.24.

Lane recently said the bank’s stock performance is a reflection of the misunderstanding people have with regard to the company’s role in crypto. The result is misinformation that only intensifies when events such as the FTX implosion happen. Silvergate denied exposure to bamkrupt crypto lender BlockFi late last month.

In his letter, Lane said he was looking to “set the record straight,” as this is what is needed to help customers.

Silvergate’s risk management and compliance

According to Lane, Silvergate complies with the Bank Secrecy Act and the USA PATRIOT Act in all of its operations. For example, the bank strictly adheres to the requirement that it must establish who the beneficial owner of each and every account is. The law also requires them to determine the source and expected use of the funds.

The due diligence process for each account continues even after the account has been deemed compliant, with red flags leading to action. Lane explained: 

“By performing our risk management procedures and fulfilling our regulatory obligations, Silvergate plays a key role in helping law enforcement identify bad actors. We take this responsibility seriously.” 

As for its relationship with FTX and Alameda, the Silvergate CEO reiterated that his team undertook significant due diligence and monitoring beyond the onboarding process. Even with what has happened with FTX, Lane says Silvergate customers’ deposits remain safe. The bank also has a resilient balance sheet, with enough liquidity.

“We purpose-built this business to support our customers not only during periods of growth but also in periods of volatility – that is, our business is designed to accommodate deposit inflows and outflows under a range of market conditions.”

The post Silvergate CEO says short-sellers spreading misinformation appeared first on Invezz.

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