By James Davis
Block.one, a crypto startup backed by billionaire venture capitalist Peter Thiel, disclosed on Thursday that it has liquidated its equity position in Silvegate bank. In its announcement, the company cited Silvergate’s failure to file its yearly report with the Securities and Exchange Commission as the major reason for selling off its stake.
Silvergate revealed its plan to shut down operations on Wednesday. Following the revelation, Block.one expressed disappointment in how things were ending for Silvergate; however, the crypto startup said it still believes that other crypto-friendly financial institutions are well-positioned.
Block.one Sells Its Stake at a Massive Loss
By December 31, Block.one CEO Brendan Blumer reported that his company held a 9.8% stake in Silvergate Bank, estimated to be worth around $94 million. Block.one first bought a 9.25% stake for roughly $91 million last November and the rest in mid-December.
On Monday, when Block.one liquidated its stake, Silvergate’s stock price was $5.12 per share. That means the company’s equity position was valued at around $18 million. Therefore, Block.one lost approximately $76 million on its investment in the bank.
In November, Block.one stated in a blog post that the crypto-friendly has a proven track record of keeping a liquid and a more conservative balance sheet investment portfolio than many federally regulated financial institutions. However, the post has since been deleted.
On Wednesday, hours after Silvergate announced that it would voluntarily wind down operations, Block.one issued a press release, saying its crypto exchange Bullish had no exposure to the bank. The crypto company didn’t touch on the status of a $220 million line of credit issued to its exchange last May.
At that time, Bullish had plans to go public by merging with the so-called blank check firm Far Peak Acquisition Corp. However, the two parties mutually agreed to terminate the merger last December. A document seen by media houses stated the value of Bullish was $9 billion last May.
Silvergate’s Loan Borrowers Issue Statements
Following Silvergate’s recent troubles, two other borrowers issued statements regarding their loans. MicroStrategy wrote on Twitter a few days ago that its $200 million loan from the bank meant to purchase Bitcoin was not due for repayment until February 2025.
Meanwhile, Bitcoin mining company Marathon Digital said on Thursday that it had prepaid its Silvergate line of credit before cutting ties with the bank.