The U.S. Department of Justice (DOJ) is investigating Silvergate Capital Corp., a cryptocurrency bank based in California, for its handling of accounts related to the now-bankrupt crypto exchange FTX and its brokerage arm, Alameda Research.
The investigation is still in its early stages, and Silvergate has not been accused of any wrongdoing.
However, the news of the investigation caused a significant drop in Silvergate’s shares. After a 29% gain during the day, the company’s shares fell 18% in after-hours trading.
This drop in shares comes after a challenging year for Silvergate, as the company posted a net loss of $949 million for all of 2022.
The recent investigation by the DOJ is not the only challenge faced by Silvergate. In early January, the company had to lay off 40% of its staff due to the collapse of FTX.
This loss of personnel, combined with the ongoing investigation, has put Silvergate in a difficult position as it continues to navigate the complex and rapidly-evolving cryptocurrency market.
In conclusion, while the DOJ’s investigation is still in its early stages and Silvergate has not been accused of any wrongdoing, the news has had a significant impact on the company’s financial performance.
The cryptocurrency market is a rapidly-evolving space, and it remains to be seen how this investigation will affect Silvergate and other companies in the industry moving forward.
