- Shares have fallen by more than 90% from November 2021’s all-time high.
- Silvergate is a “great example of everything that’s wrong with this industry”
- They were working together on a MMF which was the most dangerous link of the crypto chain.
Jim Cramer talked about why Silvergate is a ‘pivotal’ part of the crypto ecosystem on Mad Money, CNBC.
Silvergate’s shares plummeted, losing more than 43% yesterday, then another 2% or so. They have dropped by more than 90% from November 2021’s all-time high. According to the bank, the crypto industry’s breakdown caused a run on deposits, prompting it to fire 40% of its staff and sell assets at a major loss. Silvergate had deposits for FTX units as well as Alameda.
Stocks can always be lower
According to Cramer, stocks can always go lower and as long as they’re above zero, it’s fine. However, Silvergate is a pivotal part of the crypto ecosystem because it’s a “great example of everything that’s wrong with this industry.” Cramer said:
(The dramatic fall) was caused by a series of shocking disclosures made by the bank. If we don’t address it, I worry that the market cap will shrink to the point where we won’t be allowed to talk about it on air.
Silvergate Bank: History
Silvergate Bank was originally established as a savings-and loan association in 1988. Dennis Frank and Derek J. Eisele transformed it into a bank. It was very small at first with only three branches in Southern California.
The bank entered crypto in 2013 after CEO Alan Lane made a personal Bitcoin investment. They provided services to crypto exchanges and companies in the space. They got in very early according to Cramer, when most banks didn’t want to have anything to do with Bitcoin. Then, it was “really only Bitcoin.”
Silvergate continued to grow rapidly, with assets of $1.9 billion by 2017, according to 2017. Silvergate was first listed on November 13, 2019 at $13. The stock price rose by 1580% to $13.
Why did they fail to succeed?
As we mentioned, the price is down more than 90% since then. Cramer explains:
Silvergate launched the Silvergate Exchange Network (SEN), a crypto payment network. As with crypto transactions, USD can be sent instantly to Silvergate customers 24 hours a day. You could also get loans using Bitcoin as collateral. They were also offering loans using Bitcoin as collateral.