Silvergate shares fall despite CEO letter seeking to diffuse concerns over FTX fallout

Silvergate Capital fell Tuesday, adjacent aft the company's CEO released a public letter attempting to "set the grounds straight" astir its relation and existent authorities successful the crypto ecosystem.

Shares were past little by 3% aft falling arsenic overmuch arsenic 13% successful premarket trading. Speculation has been swirling astir the crypto affable slope successful the aftermath of the FTX blowup, arsenic investors effort to decipher Silvergate's narration with FTX and imaginable interaction from it. Silvergate has said that narration is constricted to deposits.

Pressure mounted connected the banal aft NBC News reported aboriginal Tuesday Sen. Elizabeth Warren, D-Mass., on with 2 Republican colleagues sent a missive to Silvergate CEO Alan Lane requesting information astir the crypto affable bank's narration to FTX and different entities headed by Sam Bankman-Fried.

Silvergate shares dropped 8.5% connected Monday.

"It has been a precise hard fewer weeks for the integer plus industry, arsenic we person each travel to presumption with the evident misuse of lawsuit assets and different lapses of judgement by FTX and Alameda Research," Lane said successful the letter, released Monday night. "There has besides been plentifulness of speculation – and misinformation – being dispersed by abbreviated sellers and different opportunists trying to capitalize connected marketplace uncertainty."

Silvergate precocious disclosed that FTX deposits astatine the slope correspond little than 10% of its full deposits from crypto customers. It has besides said it has nary outstanding loans oregon investments successful the crypto exchange.

Since the abrupt illness of FTX successful November, Lane has reiterated successful interviews, including connected CNBC, that the slope has a resilient equilibrium expanse and ample liquidity should it request to fulfill withdrawal requests. He besides repeated this successful Monday's letter.

"While this has been a turbulent clip successful the integer plus industry, our customers' deposits are, and person ever been, safely held," Lane said. "We intentionally transportation currency and securities successful excess of our integer plus related deposit liabilities."

He besides wrote that the slope has conducted "extensive owed diligence" connected FTX and its sister company, the trading steadfast Alameda Research, and that it takes hazard absorption and compliance "extremely seriously."

Research from KBW backs up the thought that Silvergate's narration with FTX platforms was "extremely limited" based connected the company's ain bankruptcy filings, according to expert Michael Perito. He said successful a enactment Tuesday that astir customers were "likely transferring worth onto the FTX speech via crypto and integer wallets versus fiat transfers from banks."

"Weeks person present passed since the FTX bankruptcy and archetypal misleading societal media claims that SI was progressive began," said successful the note. "SI is simply a highly regulated instauration (Federal Reserve is its superior regulator), with Crowe LLP serving arsenic its auditor. If the bank's regulators were highly acrophobic astir enactment ongoing astatine SI, it would beryllium a reasonably speedy process to place those problems, successful our estimation, and shouldn't instrumentality aggregate weeks."

Wedbush noted that portion Silvergate facilitating payments to Alameda was "consistent with mean concern practices, the missive besides didn't supply a existent deposit update. That implies the institution "may proceed to acquisition deposit pressure," Wedbush expert David Chiaverini said successful a enactment Tuesday.

—CNBC's Michael Bloom contributed reporting