Silvergate Confirms “Minimal” Exposure To Bankrupt Genesis

Key takeaways:

  • The parent business of Silvergate Bank, Silvergate Capital, declared minor exposure to Genesis Global Capital.
  • In regards to Genesis, Silvergate asserted that their deposits for December 31, 2022, and January 19, 2023 totaled less than $2.5 million.

In a press release issued on January 20, Silvergate Capital, the parent company of Silvergate Bank, disclosed “minimal” exposure to Genesis Global Capital.

Less than $2.5 million was Silvergate’s deposit arrangement with Genesis as of December 31, 2022 and January 19, 2023. Genesis is not a custodian for Silvergate’s SEN Leverage loans that are bitcoin-collateralized, and Silvergate has neither stakes in Genesis nor existing debts to it.

Although the market for digital assets is still in a state of flux, Silvergate’s exposure to Genesis is low, and customer deposits are being maintained as securely as they have always been.

Not just Silvergate but other cryptocurrency-related businesses have discussed Genesis exposure. Worries over the company’s exposure to bankrupt Genesis of $151 million were also raised by the founder of Bybit.

Barry Silbert’s crypto empire, Digital Currency Group, which is made up of Genesis Global Holdco, LLC, Genesis Asia Pacific Pte. Ltd., and Genesis Global Capital, LLC, filed for Chapter 11 bankruptcy protection in the Southern District of New York.

Genesis owes its biggest lenders more than $3.5 billion, including the Stellar Development Foundation, Cumberland DRW, MoonAlpha (the company that runs Babel Finance), Mirana (the investment division of ByBit), and VanEck’s New Finance Income Fund.

Only ByBit’s investment company Mirana, according to CEO Ben Zhou, has some exposure to the bankrupt cryptocurrency lender Genesis.

It is important to note that Silvergate reduced its ties to Sam Bankman-FTX Fried’s exchange when it failed in November. Less than $1.2 billion, or less than 10% of its total deposits, were recorded at the time as FTX deposits by Silvergate.

Silvergate Bank was also charged with playing a substantial role in the Sam Bankman-FTX Fried’s and Alameda Research fraud in a class-action lawsuit brought before a US court.

Additionally, Silvergate reported a fourth-quarter net loss of over $1 billion a few days back. The report states that the corporation lost $33.16 per common share.

It is no longer a mystery that Genesis’ latest failure will have a significant long-term impact on the industry. What remains to be seen is how many other crypto titans succumb to this disruptive wave.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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