According to a Bloomberg report, after the announcement by Silvergate Capital Corp. (NYSE:SI) that was forced to sell assets at a steep loss because customers pulled out most of their deposits during the fourth quarter, one of Cathie Wood’s funds sold virtually all of its shares in the cryptocurrency-focused bank.
Cathie Wood’s ARK Fintech Innovation exchange-traded fund dropped around 404,000 shares of Silvergate on January 5th, 2023, cutting the ETF’s holdings by more than 99%.. The fund’s remaining holdings are worth about $43,000 — only about 0.01% of the fund’s total portfolio.
According to Forbes, Cathie Wood is a star stock-picker and founder of $50 Billion (assets) ARK Invest, that manages several actively managed exchange-traded funds (ETFs). After stints at other investment firms, she created ARK in 2014 hoping to package active stock portfolios in an ETF format.
Silvergate Shares Dip
Silvergate Bank is a Californian bank that mostly deals in cryptocurrency transactions. And after the collapse of FTX, concerns have been raised about its health.
On January 5th, Silvergate told investors that customers’ deposits of digital assets fell from $11.9 Billion to $3.8 Billion during the fourth quarter. It was the time when the fallout from the FTX collapse rattled investors’ trust in cryptocurrency lenders. Thus the exodus forced it to sell securities and related derivatives at a loss of $718 Million.
Meanwhile this disclosure sent Silvergate shares down by a record 43% on this Thursday, and then they slipped as much as 6.9% more on Friday. However, the stock has been in a downward spiral for more than a year amid the harsh market condition in the crypto industry.
Since its record closing high of $222.13 in November 2021, the stock has fallen more than 94%, wiping out almost $5.5 Billion in market value.
Earlier the bank had said it had no outstanding loans or investments in FTX, but its shares have dropped 69% of their value since the exchange’s meltdown, which sparked a wild crypto sell-off.
On the other hand, a U.S. attorney told a bankruptcy court on Wednesday that prosecutors had seized U.S. bank accounts at Silvergate and Farmington State Bank affiliated with FTX’s Bahamas-based business, known as FTX Digital Markets. According to the court records the accounts at Silvergate Bank and Farmington State Bank, which does business as Moonstone Bank, held about $143 million.
Slowing-up the expansion of its business, La Jolla, California-based Silvergate is also delaying the launch of a blockchain-based payment solution it had purchased from Meta Platforms Inc-backed Diem Group last year. The bank said it would take an impairment charge of $196 million in the fourth quarter on assets purchased for the payment solution venture.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/01/07/ark-invests-cathie-wood-sold-99-of-silvergate-stake/