Block.one Says it Sold Off its Stake in Silvergate

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On Wednesday, the crypto startup backed by Peter Thiel, Block.one, issued a press release stating that it had sold off its stake in Silvergate Bank.

The statement

According to Block.one, it had decided to exit its equity position after Silvergate Bank had delayed the submission of its annual financial report to the Securities and Exchange Commission (SEC) last week.

Silvergate Bank also announced on Wednesday that it was winding down its operations. Block.one stated that it was disappointing to see how things had turned out for Silvergate.

But, the startup said that it still believes that financial institutions and banks, which have embraced the crypto and digital assets sector, are not at risk.

The stake

SEC filings show that by the end of 2022, the combined stake of Block.one and Brendan Blumer, its CEO, in Silvergate Bank had stood at 9.9%, which is valued at $95 million.

He had first bought a stake in the crypto bank in November of about 9.27%, which was valued at $92 million, and the remaining on December 31st

According to Block.one, it had gotten rid of its stake last Friday and at that time, the shares of Silvergate Bank had been valued at $5.69.

This means that the company’s equity position was valued at $18 million, which means that Blumer and Block.one suffered losses of about $83 million on their investment.

Other details

In November, Block.one had issued a press release, which said that Silvergate had a track record of maintaining a conservative and liquid balance sheet as opposed to most banking institutions that are federally regulated.

The press release has been deleted since then. After Silvergate’s announcement on Wednesday, Block.one also confirmed that its crypto exchange Bullish does not have any exposure to the bank.

However, it did not mention the revolving line of credit that had been issued last year to Bullish in May worth $225 million. 

Bullish had been planning to merge with a blank check company named Far Peak Acquisition Corp at that time, but it had been called off in December. 

The company has not revealed the details of its revolving line of credit.

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