California-based crypto-friendly company Silvergate Capital will delay its annual financial report filing with the US Securities and Exchange Commission (SEC) while hinting that it would come under more regulatory scrutiny from banking regulators and US authorities.
In a filing on March 1, Silvergate revealed that the company would not be able to file the annual form 10-k with the SEC — a report which, among other information, gives a detailed performance of a company for the year and audited financial statements — for the end of the 2022 fiscal year.
While the company report was due on March 1, Silvergate said the firm may still not meet a March 16 extended deadline. The filing notice sent the company’s shares tumbling over 25% in after-hours trading.
Stating reasons for the delay, Silvergate said that the company needed more time “to perform analysis, record journal entries related to subsequent events, and to complete management’s evaluation of internal controls over financial reporting.” The filing also stated Silvergate is currently analyzing specific regulatory and other inquiries and investigations that are pending with respect to the Company.
Silvergate further mentioned that it sold more debt securities in January and February 2023, adding that further losses could affect Silvergate Capital and its subsidiary Silvergate Bank, which could cause both entities to be “less than well-capitalized.” As previously reported by crypto.news, Silvergate’s Q4 2022 results showed that the firm lost nearly $1 billion.
In the filing’s forward-looking statements, Silvergate mentioned that some key factors could impact the company’s actual results, which include the volatility that rocked the market in Q4 2022, high-profile crypto companies filing for bankruptcies which have subsequently affected investor confidence in the industry, and increased regulatory scrutiny on banks providing digital assets services.
Following the fall of cryptocurrency exchange FTX, Silvergate has been subject to investigations, criticisms, and lawsuits. Crypto skeptic senator Elizabeth Warren, along with two other Republican US Senators, wrote a letter to Silvergate seeking information on the company’s relationship with FTX and Sam Bankman-Fried, along with its business dealings with FTX sister firm Alameda Research. Silvergate was also slammed with a class action lawsuit alleging that the firm violated securities laws.