Silvergate marketed itself as a crypto-friendly banking services provider but, unsurprisingly, it ended up providing financial services to firms that were once the world’s second-largest crypto exchange and market-maker: FTX and Alameda Research.
As the world has discovered the reality behind Silvergate’s business, investors have progressively sold off shares as they dropped from their $238 November 2021 heights to under $13 today. Not only that, even Senators are probing Silvergate regarding inappropriate transfers of FTX customer funds into Sam Bankman-Fried’s trading fund, Alameda.
“Your bank’s involvement in the transfer of FTX customer funds to Alameda reveals what appears to be an egregious failure of your bank’s responsibility to monitor for and report suspicious financial activity carried out by its clients,” wrote senators Roger Marshall, Elizabeth Warren, and John Kennedy in a letter to Silvergate.
The senators are also demanding that Silvergate release all relevant records and want it to “answer a set of questions to provide the public a full accounting of its relationship with FTX and Alameda.”
With Silvergate’s reckoning still playing out, below is a timeline of events that led up to and hastened the company’s collapse.
Historical timeline of Silvergate
August 17, 2017: Silvergate passes $1 billion in total deposits.
November 16, 2018: HomeStreet Bank acquires Silvergate’s business lending team and retail branch in San Marcos, California.
October 28, 2019: Silvergate opens its initial public offering of Class A common stock.
November 12, 2019: Silvergate closes its IPO of Class A common stock.
November 18, 2019: Silvergate announces the closing of its underwriters’ option to purchase additional shares.
January 21, 2020: Silvergate hires Benjamin Richman as senior vice president and director of digital currency.
June 16, 2020: Silvergate expands SEN, which provides access to US dollar loans using bitcoin as collateral.
October 6, 2020: Silvergate completes $100 billion worth of transfer volumes across SEN.
October 26, 2020: Silvergate discloses $586 million in digital asset-related deposits.
January 26, 2021: Silvergate closes a follow-on public offering of Class A common stock.
March 9, 2021: Silvergate opens an at-the-market sale of Class A common stock.
March 29, 2021: Silvergate selects Fidelity Digital Assets as a custody provider for SEN Leverage.
July 7, 2021: Silvergate hires Elliptic to provide KYC/AML services during customer onboarding.
April 20, 2021: Silvergate files Q1 2021 earnings.
May 12, 2021: Silvergate announces deal to be the exclusive issuer of Diem’s stablecoin.
May 18, 2021: Silvergate announces completion of an at-the-market equity offering.
July 28, 2021: Silvergate announces pricing of a planned $200 million depositary share offering.
October 27, 2021: Silvergate announces its virtual appearance at Bank of America’s Securities 2021 Banking and Financials Conference.
October 29, 2021: Silvergate CEO Alan Lane says Silvergate Capital processed more than $160 billion in digital asset-related transfers in Q3 2021, a 300% increase over Q3 2020.
November 11, 2021: Analysts at JP Morgan give Silvergate Capital an ‘overweight’ rating and say the stock could increase by 60%.
November 22, 2021: Shares of Silvergate trade to their all-time high of $239 per share which has never been subsequently surpassed.
December 9, 2021: Silvergate closes its Class A common stock public offering.
December 16, 2021: In an appearance on CNBC’s Squawk on the Streets, CEO Alan Lane calls rising interest rates good for Silvergate Capital’s earnings.
December 16, 2021: Silvergate and EJF Capital launch a fintech joint venture fund.
January 12, 2022: Michael Perito of KBW discusses upgrading Silvergate Capital to an ‘outperform’ rating during an appearance on CNBC’s Power Lunch.
January 18, 2022: Alan Lane estimates that any Federal Reserve-backed digital currency is likely still years away.
January 27, 2022: Facebook’s Diem Association sells assets, including intellectual property, to Silvergate. Diem had planned to release its own stablecoin but Mark Zuckerberg was called into Senate testimony, and Diem ran into numerous obstacles, regulatory issues, and questions from members of Congress.
February 2, 2022: Silvergate says it will use the Diem Association assets it acquired from Meta to launch its own stablecoin. Alan Lane said Silvergate will attempt to convince former Diem Association members to support its stablecoin.
February 15, 2022: Silvergate adds support for euros to SEN.
March 29, 2022: MicroStrategy takes out a $205 million loan from Silvergate. It puts up $820 million in bitcoin as collateral. MicroStrategy says it will use the money to buy more bitcoin.
April 19, 2022: Silvergate releases Q1 2022 earnings, beating analysts’ estimates by 75%. Stocks jump by 13%.
April 26, 2022: Silvergate CEO Alan Lane discusses helping MicroStrategy use its bitcoin as collateral for a loan to buy more bitcoin during an appearance on Bloomberg’s Crypto Reports.
June 1, 2022: Silvergate CEO Alan Lane appears on Bloomberg podcast Odd Lots to discuss stablecoins in the wake of the Terra Luna collapse.
June 13, 2022: Wells Fargo calls Silvergate a buy opportunity despite bearish digital asset markets.
June 16, 2022: Alan Lane denies being surprised by volatility in digital asset markets during an appearance on CNBC’s TechCrunch.
July 19, 2022: Silvergate reports that digital asset-related deposits remained sturdy in Q2 2022 despite a downturn in markets.
October 25, 2022: Silvergate launches 24/7 customer support.
November 7, 2022: Silvergate promotes Ben Reynolds to president and hires Kate Fraher as chief risk officer.
November 10, 2022: Bank of America downgrades Silvergate Capital stock, citing uncertainty in digital asset markets.
November 11, 2022: Silvergate publishes a statement saying that FTX accounted for less than 10% of account holders’ deposits.
November 16, 2022: Silvergate publishes a mid-quarter update and announces plans to participate in Oppenheimer’s fifth Blockchain & Digital Assets Summit.
November 18, 2022: Alan Lane discusses the impact of the FTX situation on Silvergate and the overall digital asset market on CNBC’s Power Lunch.
November 28, 2022: Sam Bankman-Fried admitted that FTX-related user deposits were routed through Alameda Research’s bank account at Silvergate.
December 5, 2022: Senators Elizabeth Warren, Roger Marshall, and John Kennedy send a letter to Silvergate requesting records of FTX’s fund transfers.
December 13, 2022: Lumida CEO Ram Ahluwalia and former hedge fund manager Marc Cohodes debate the potential impact of FTX’s bankruptcy on Silvergate Capital on the Unchained Podcast.
December 21, 2022: Silvergate CEO Alan Lane responds to queries from senators, saying that job performance issues were not a factor in his son-in-law’s move away from his position as Silvergate’s chief risk officer.
January 4, 2023: Judge John Dorsey orders the seizure of FTX funds held in a Silvergate bank account.
January 5, 2023: Silvergate lays off 40% of its staff amid a steep decline in its stock price. Depositors withdraw $8.1 billion from Silvergate accounts. Moreover, Silvergate reportedly incurs a $718 million loss while selling $5.2 billion worth of reserves to satisfy some of those withdrawal requests.
In addition, ARK Invest discloses selling $5 million in Silvergate Capital stock, and publicly-traded Marathon Digital pays down a $30 million revolving line of credit at Silvergate Capital. This frees up 3,615 bitcoin it had posted as collateral.
January 6, 2023: JP Morgan downgrades Silvergate Capital stock from ‘overweight’ to ‘neutral’ and adjusts its price target from $30 to $14. On the same day, Alan Lane denies having any loans or investments in FTX in a letter to investors. He accuses short sellers of spreading “speculation” and “misinformation.”