Shares of Silvergate, a cryptocurrency company, are being shorted, while a new addition is being made to the fund of cryptocurrency whale Cathie Wood. Here are the details…
Cryptocurrency whale buys COIN stake
After ARK announced on Friday that it had purchased 162,325 shares of COIN, Cathie Wood is back to buying shares of Coinbase (COIN) after a hiatus of nearly a month. ARK’s last COIN purchase was in mid-January, when the exchange bought a stake for $3.3 million. The $9.2 million purchase came as US regulators stepped up their scrutiny of the crypto-asset industry. While the U.S. Securities and Exchange Commission (SEC) isn’t going after Coinbase’s staking product, as it did with Kraken, questions remain as to whether it can come after it in a second sanctions attack.
As we reported on cryptokoin.com, a Wall Street Journal report published earlier on Monday said that Paxos is the latest target of the SEC’s sanctions campaign on the Binance USD (BUSD) token. ARK’s Innovation ETF (ARKK) is up 28 percent since the start of the year, while the ARK Fintech Innovation ETF (ARKF) is up 25 percent so far this year.
Silvergate shares are being shorted
On the other hand, more than 72.5% of shares of crypto bank Silvergate Capital are being short-sold, according to the most recent Short Interest Reporting dated Feb. Thus, Silvergate became the second most short-sold stock in the United States. The Financial Industry Regulatory Authority (FINRA) collects and publishes short selling positions for all stocks twice a month. A short position means that investors and traders believe that the price of a security, such as a stock, will drop. The short seller makes a profit from the price decrease of the security.
Currently, Silvergate stock (SI) has fallen over 87 percent in the past twelve months. Silvergate’s bearish trend stems from its latest earnings report and the legal battles the company has faced over its affiliation with bankrupt firms FTX and Alameda Research. On January 17, the bank announced a net loss of $1 billion attributable to common shareholders in the fourth quarter of 2022. According to a report from the SEC, Silvergate saw significant deposit outflows during this period. This forced the company to seek wholesale funds and sell debt securities to maintain liquidity.
Silvergate reportedly borrowed $3.6 billion from the US Federal Home Loan Banks System to mitigate the effects of the surge in withdrawal rates following the collapse of crypto exchange FTX in November. The bank is facing investigations and lawsuits in the US for allegedly assisting FTX in its fraudulent activities, including lending and merging user funds. An investigation is currently ongoing into the bank’s role in the FTX crisis. According to Silvergate, Alameda opened a bank account in 2018 before FTX was launched. The company claims that it was doing due diligence at the time and constantly monitoring the situation.
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