• MicroStrategy took to Twitter to reassure investors of its minimal exposure to Silvergate, a crypto bank that has recently been the subject of online discourse after news of a later-than-usual 10-K filing.
• The company explained that even if Silvergate becomes insolvent, the $205 million loan by Microstrategy won’t be accelerated to meet the bank’s financial needs.
• However, major cryptos tumbled by 5% in the daily time frame due to concerns about another cataclysmic event for crypto with some going as far as calling the probable bankruptcy of Silvergate to be the “second FTX”.
Background Of The Silvergate Quake
The entire Silvergate debacle started when FTX, one of the bank’s biggest partners, collapsed leaving Silvergate and the whole crypto market in tailspin. Since then, the company has been on some sort of life-support, with Q4 earnings metrics dropping substantially. As a result, the company’s delayed 10-K filing prompted its partners to distance themselves to mitigate possible losses.
MicroStrategy Reassures Investors
MicroStrategy recently took to Twitter to reassure investors – and the market as a whole – of its supposedly “minimal exposure” to Silvergate. According to the tweet, they explained that even if Silvergate becomes insolvent, their $205 million loan wouldn’t be accelerated in order meet their financial needs. This was not taken lightly by the market with major cryptos tumbling by 5% in response.
Partners React To Delayed Filing
Industry giants like Coinbase, Circle, Paxos, Galaxy and CBOE recently released statements regarding their respective exposures. Circle stated that they are “unwinding certain services with them [Silvergate] and notifying customers.” This sparked further concerns about another cataclysmic event for crypto with some going as far as calling this probable bankruptcy of Silvergeate being referred to as “the second FTX”.
MicroStrategy: Potential Spillovers Ahead
Since then bank has been running on deficit ever since it suffered an $8.1 billion bank run last year; it received loans amounting up to $3.6 billion from Federal Home Loan Bank (FHLB) San Diego branch in order stabilize their finances temporarily until conditions improve for them again.
Conclusion
Although Microstrategy tried reassuring investors and stakeholders through Twitter posts , concerns still remain high over potential spillover effects should anything happen catastrophically within silver gate’s operations . At present , it is difficult not speculate what would happen should one of these scenarios occur but all we can do is hope that this situation will get resolved without much negative effect on either party involved or external entities affected