After Silvergate Bank revealed a delay in its 10-K filing, its shares dropped more than 30% in after-hours trading. The company also stated that it is anticipating an onslaught of inquiries from the SEC, the DoJ, and Congress over the digital assets side of its business.

Silvergate Delays 10-K Causing SI To Collapse 30%+

On Wednesday, March 1st, Silvergate Bank told the SEC it will not be able to make its 10-K filing for the fiscal year 2022 by the set deadline. Furthermore, Silvergate revealed it would likely not be able to meet the extended deadline of March 16th. In the document, the company revealed the delay is partially due to the hardships caused by “the substantial volatility in the digital asset industry during the fourth quarter of 2022 and continuing into 2023, including several high-profile bankruptcies.”

Indeed, Silvergate was hit particularly hard by the collapse of the FTX and saw deposits from cryptocurrency firms plunge just over $3 billion following an $8 billion-worth bank run. The company’s Q4 earnings report also revealed a loss amounting to $1 billion. In today’s filing, Silvergate saw additional woes on the horizon and impairments to its operations:

including potential liability and restrictions on the Company’s business, resulting from various litigation (including private litigation) and regulatory and other inquiries and investigations against or with respect to the Company, investigations from our banking regulators, congressional inquiries and investigations from the U.S. Department of Justice; the timing and results of our additional procedures and documentation and the completion of audit procedures by our independent registered public accounting firm; the Company’s ability to file its Form 10-K and future SEC reports on a timely basis; the Company’s assessment in accordance with applicable accounting rules regarding the Company’s ability to continue as a going concern for the twelve months following the issuance of its financial statements; the possibility that the Company and the ongoing review by the Company’s independent registered public accounting firm may identify errors or control deficiencies with respect to the Company’s internal controls over financial reporting; and the Company’s ability to remediate any possible material weaknesses.

While Silvergate’s shares have been on the decline throughout the year—being down nearly 22% by the close of the trading day on Wednesday—they took a nosedive after the delay was revealed. Its stock entered into a continuous decline which amounted to nearly 33%—down to $9.08 from $13.53 at close—at the time of writing.

Silvergate and the FTX Contagion

The sudden bankruptcy of FTX in November sent shockwaves throughout the digital assets sector. Most of the exchange’s executives have been charged both by regulators and the DoJ by the end of February with only Sam Bankman-Fried pleading not guilty. The effects of the collapse already sent two other major companies—BLockFi and Genesis—into bankruptcy and caused significant disruptions to multiple other businesses.

Due to its close connections to SBF’s fallen empire, Silvergate Bank has also faced a number of issues throughout the contagion. In early January, it was reported that the bank was forced to cut its workforce by as much as 40%, and by mid-February, its stock became the most shorted in the US.

Furthermore, Wednesday’s filing confirmed that the reports of a DoJ probe into the company that emerged last month are also likely true. The collapse of FTX, the increased regulatory pressure, and the effects of the “crypto winter” have also had a more widespread effect on a number of banks with dealings with cryptocurrency companies. For example, Signature Bank notified Binance in late January it is placing significant limits on the transactions of the exchange’s customers.

This article originally appeared on The Tokenist

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