Veteran short-selling trader Marc Cohodes seems to have focused on a cryptocurrency company. In a tweet he shared, Cohodes implied that he opened a short selling position against Silvergate. Here are the details…
Cohodes focuses on cryptocurrency company
Marc Cohodes, a famous “short-seller”, celebrated his victory by posting pictures of an empty Silvergate office on Twitter the other day. As we reported as Kriptokoin.com, the shares of the California-based bank have taken a significant hit in recent months. It has dropped nearly 95 percent in the last six months, mainly due to its ties to FTX and Alameda Research. On Friday, Moody’s downgraded the bank’s long-term issuer rating, warning that further reductions were possible after the bank said it was undercapitalized and failed to submit its annual report in a timely manner. In response, the bank announced the shutdown of its 24-hour money transfer system, the Silvergate Exchange Network.
Cohodes expressed his surprise at Silvergate Bank’s potential to open next week. Short selling behaviors are common among those who make money by betting against companies, as they often lead to feelings of paranoia and conspiracy. Cohodes successfully short-sold German company Wirecard in 2020, which eventually went bankrupt due to fraud allegations, leading him to draw parallels between the two developments.
Cohodes had issued a warning on November 14.
On November 14, Marc Cohodes warned investors of the risk posed by Silvergate Bank. The warning was based on information provided to him by Porter Collins, co-founder of Seawolf Capital and known for foretelling the 2008 financial crisis. In an interview with analytics site Hedgeye, Marc described Silvergate as “garbage” quality and insisted that it be disclosed as FTX. “I think SI is garbage and they need to be disclosed just like FTX is,” he said, using the company’s stock code.
Prior to his warnings about FTX, Cohodes had spent several months examining the crypto-exchange giant’s finances and found little that made sense. The Wirecard scandal with dubious businesses with large offshore funds flows often used for money laundering has moved the Cohodes. “So when you hear FTX talking about Silvergate and saying they can’t do business without it, you should start researching Silvergate,” Cohodes said.
Cohodes expands position
In his November Hedgeye video, Cohodes also said that he is shorting the stock, meaning he will profit if the price of the shares drops. He said on Friday that he continues to short-sell shares and his position is now larger than it was in November as he expects shares to fall further.
Silvergate bank is currently under multiple investigations and being sued by investors. A class action lawsuit accused Silvergate of improperly using money belonging to FTX clients and “considering” crimes committed at the exchange and its sister hedge fund Alameda Research. Cohodes explained that he will likely file a few complaints after the company’s stock prices have soared in recent weeks, causing financial losses. He suspects that management may not have made the shareholders aware of the situation and suggests that someone may be manipulating the shares.
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