Crypto bank Silvergate ranks as the second most-shorted stock on Wall Street

Crypto slope Silvergate Capital Corp. stands successful the 2nd presumption arsenic most-shorted banal successful the United States, with implicit 72.5% of its shares shorted, according to the latest Short Interest Reporting from Feb. 9. 

The Financial Industry Regulatory Authority (FINRA) collects and publishes doubly a period abbreviated involvement positions of each equity securities. A abbreviated presumption means investors and traders judge the terms of a security, specified arsenic a stock, volition alteration successful value. A abbreviated seller profits from the terms diminution of a security.

At the clip of writing, Silvergate banal (SI) is down implicit 87% successful the past 12 months. The bearish sentiment connected Silvergate stems from its caller net study and ineligible battles the institution faces implicit its narration with bankrupt firms FTX and Alameda Research.

On Jan. 17, the bank announced a $1 cardinal nett loss attributable to communal shareholders successful the 4th fourth of 2022. According to a report from the United States Securities and Exchange Commission (SEC), Silvergate saw important outflows of deposits during the period, which forced the institution to question wholesale backing and merchantability indebtedness securities to support liquidity.

Related: Banks nether unit from U.S. authorities to chopped ties with crypto firms

Silvergate reportedly borrowed $3.6 billion from the U.S. Federal Home Loan Banks System to mitigate effects of a surge successful withdrawals pursuing the illness of crypto speech FTX successful November 2022.

The slope faces probes and lawsuits successful the U.S. for allegedly aiding FTX connected fraudulent activities, including lending and commingling user's funds. The institution has been accused of "furthering FTX's concern fraud", portion shareholders assertion Silvergate violated the 1934 Securities Exchange Act. A Justice Department probe is presently ongoing implicit the bank's relation successful FTX businesses.

According to Silvergate, Alameda opened an relationship with the slope successful 2018, earlier the motorboat of FTX. The institution claims to person conducted owed diligence astatine the clip and monitored the concern connected an ongoing basis.

Moody’s Investors Service precocious reacted to the slope situation, downgrading ratings of Silvergate Capital and its slope to "junk", with a antagonistic outlook for some organizations.

Silvergate did not instantly respond to Cointelegraph's petition for comments.