SILVERGATE’S DEPOSITORS FLEE A plunging stock price is threatening the crypto-friendly bank’s independence after the company revealed that more than two-thirds of its deposits were withdrawn in the fourth quarter. Citing “a transformational shift” in the cryptocurrency industry that led to multiple bankruptcies last year, Silvergate provided preliminary results for the final quarter that showed its deposits from digital-assets customers–the bulk of its business–shrank to $3.8 billion at year-end from $11.9 billion on September 30. The bank was quick to point out that it held cash and equivalents of $4.6 billion on December 31, allowing it to more than meet withdrawals from all its crypto-related customers. But the shrinkage of a business that held $14.1 billion of digital-currency-sector assets at the start of last year and a stock-market capitalization that has fallen to $355 million from $4.5 billion since that time, put its continued existence as a standalone company in doubt. The shares lost more than a third of their value for the week through Friday afternoon, sliding to $11.12. Speaking on a conference call to explain its release of the fourth-quarter metrics, executives raised the possibility that Silvergate might find itself a takeover target, Yahoo reported, based on its bargain price, and such a transaction might get a push from banking regulators. |