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Citadel Securities Holds 5.5% of Silvergate Capital Shares, News Pumps Stock by 22.85%

Citadel Securities, a market maker, was reported to have taken a 5.5 percent position in Silvergate for around $25 million, ascribed to the abrupt jump in SI shares.

Photo by Yiorgos Ntrahas / Unsplash

A significant increase in the number of institutional investors interested in Silvergate Capital Corporation's stock market was observed (1) over the recent months. Silvergate Capital Corporation is a cryptocurrency-focused bank largely involved in the FTX and Alameda fraud charges.

As a direct result, Shares of Innovation has been upward over the previous 30 days, gaining more than 30 percent.

On the other hand, the increases in SI shares skyrocketed in the last 2 days, as seen by the fact that they finished trading at $17.97, an increase of 22.85 percent.

Silvergate Capital Share Chart. Chart Source: (1.1)

The SI continued to see increases during after-hours trading, with around 4.09 percent of those gains. Citadel Securities, a market maker, was reported to have taken a 5.5 percent position in Silvergate for around $25 million, responsible for the abrupt jump in SI shares.

In Form 13G, submitted (2) to the Securities and Exchange Commission (SEC), Ken Griffin's company reportedly owns around 1.73 million shares in Silvergate Capital.

A source familiar with Citadel Securities pointed out that the filing is the outcome of the company's operations in options market-making rather than a directed investment or position in Silvergate.

It is important to note that the positions of options are determined based on long call holdings, regardless of whether or not there are any offsetting short call or put positions.

Silvergate (SI) Stock Preview

Because Silvergate is a cryptocurrency-focused financial institution, its stock market has shown a high correlation with the bad market of 2022. According to the collected data made available by MarketWatch, SI share fell by nearly 86 percent during the previous year.

Despite this, Silvergate CEO Alan Lane has stated that the business would continue to work toward its goal of providing institutional investors with exposure to bitcoin. In addition, throughout the last ten years, the corporation has invested in Bitcoin and other digital asset infrastructure.

As a direct consequence, institutional investors, such as Susquehanna, have increased their financial commitment to Silvergate by purchasing about 2.37 million shares of Silvergate Capital.

This represents a 7.5 percent interest in the company. Additionally, as of December 31, BlackRock Inc. disclosed a holding in Silvergate Capital equal to 7.2% of the company.

The multitude of institutional investments in Silvergate has been made even though the company recorded a net loss of $1 billion during the last quarter of 2022. As of December 31, the firm claimed to have a total of 1,620 clients that use digital assets.

Interestingly, the Silvergate Exchange Network processed over $ 117.1 billion in transactions during the final three months of 2022.

As of January 19, 2023, FTX-induced limits on DCG-backed Genesis Global Trading were responsible for less than $2.5 million of the company's losses. These losses contributed to part of the company's overall loss.

However, the corporation is still being probed by regulatory officials in the United States for its part in the collapse of FTX and Alameda.