EOS Parent Empties Stake in Silvergate
- The startup behind EOS, Block.one, has sold all of its stake in Silvergate Capital Corporation, due to the company’s troubles.
- Block.one and its CEO, Brendan Blumer held a combined 9.9% stake in Silvergate Bank, worth approximately $95 million in December 2022.
- The position of the company in Silvergate would’ve been worth around $18 million at the time of sale, i.e., they lost $83 million on their investment.
- Silvergate Capital Corporation announced that it will liquidate Silvergate Bank after looking at the current market conditions.
The troubles of Silvergate Bank, the subsidiary crypto bank of Silvergate Capital Corporation, do not seem to be ending. The parent startup behind popular blockchain EOS (EOS), Block.one, has announced that it has sold all of its stake in the crypto bank. This announcement comes at a time when the stock of the crypto company has plunged almost 70% in the past few months and continues to drop on a daily basis due to uncertainty regarding the future of its business.
The situation for Silvergate Bank went south when it confirmed that it would be delaying its annual 10-K filing. This was followed by several crypto companies, like Coinbase, MicroStrategy, Crypto.com, Paxos, and others, severing their ties with the crypto bank. Block.one has also ended its exposure to the company, as per a public statement issued earlier this week.
“While we are disappointed with this outcome, we remain unwavering that banks and other financial institutions embracing the digital asset and cryptocurrency sectors are well-positioned to use technology to advance the capabilities of both traditional financial services and the new burgeoning digital asset economy to better serve the needs of the public,” said Block.one.
Moreover, Block.one added that due to the delayed 10-K filing and the closure of the company’s popular product, the Silvergate Exchange Network (SEN), a digital asset exchange network, the company behind EOS sold all of its stake in the troubled crypto bank. The crypto community was speculative about the performance of Silvergate Bank when it posted a loss of over $1 billion in Q4 2022. The company stated that its exposure to bankrupt crypto exchange FTX and its sister trading firm Alameda Research was the reason for such significant losses.
As reported earlier by BitcoinWisdom, MicroStrategy and USDT issuer Tether distanced themselves from the inevitable collapse of the crypto bank. MicroStrategy posted on the social media platform Twitter that the collateral for its loan with the bank is not custodied by Silvergate. Interestingly, earlier this year, Silvergate Bank announced plans to cut down its head count by 40% to help it survive the current economic situation.
The parent company of EOS, Block.one and its CEO, Brendan Blumer, held a combined 9.9% stake in Silvergate Bank worth approximately $95 million as per filings with the SEC. Around 9.27% of the stake was acquired in November for about $92 million, while the rest was acquired on December 31.
After the announcement on Friday that Block.one had ended its exposure to Silvergate, the shares of the company ended at a price of $5.69. Therefore, the exposure of the company responsible for the development of EOS stood at around $18 million. This confirms that Blumer and Block.one lost roughly $83 million on the investment.
In a press release that has now been deleted, the EOS creator stated that Silvergate has “a proven track record of maintaining a liquid and conservative balance sheet investment portfolio—far more conservative than most federally regulated banking institutions.”
It is crucial to note that Silvergate Capital Corporation has announced the liquidation of Silvergate Bank “in light of recent industry and regulatory developments” and multiple firms have ended their relations with the crypto bank.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
