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Block.One Founder & CEO Blumer Takes Sizable Positions in Silvergate, Buys Another 9.3% Stake

UTC by Tolu Ajiboye · 3 min read
Block.One Founder & CEO Blumer Takes Sizable Positions in Silvergate, Buys Another 9.3% Stake
Photo: Wikimedia Commons

EOS developer and its CEO Brendan Blumer have acquired separate stakes in Silvergate for a combined 17% ownership. 

Brendan Blumer, founder, and CEO of EOS developer, recently purchased a 9.3% stake in crypto bank Silvergate Capital (NYSE: SI). This acquisition makes Blumer the largest shareholder of the California-based digital asset institution. Furthermore, filings with the Securities and Exchange Commission (SEC) reveal that bought an additional 7.5% of Silvergate’s shares. This development means that and its CEO Blumer own a combined 17% stake in Silvergate.

According to documents, Blumer’s 9.3% Silvergate stake amounts to 2,934,537 shares, while his firm owns 2,363,186 shares of the crypto bank.

Block.One, CEO Buy into Silvergate on Good Faith in “Undervalued” Stock suggested in a press release that its sizable purchase of Silvergate’s stock demonstrates faith in the crypto bank’s operability. According to the EOS developer, Silvergate is a consistent innovator with an undervalued share price. As wrote:

“Silvergate Capital has a proven track record of maintaining a liquid and conservative balance sheet investment portfolio – far more conservative than most federally regulated banking institutions… We believe Silvergate’s current equity prices do not accurately reflect their strong balance sheet, their strategic positioning, or their market-defiant growth trajectory, and therefore offers a unique investment opportunity. We are excited to be a new passive shareholder.”

Silvergate shares were trading more than 8% higher at $27.47 Wednesday afternoon following the development. As of press time, the company’s stock is priced at $28.15.

Silvergate Trading Significantly Lower amid FTX Collapse

Although Silvergate has pared down losses incurred over the past week, the crypto bank is still 49% down over the past month. This deficit comes in the aftermath of the sudden collapse of one-time leading crypto exchange FTX. Traders and observers believe Silvergate’s market cap is declining due to the company’s substantial exposure to the fallen FTX. Last Thursday, Silvergate’s chief executive Alan Lane moved to assuage investors and play down the implication of the FTX crash on the crypto bank. At the time, Lane explained:

“Suffice it to say, whether deposits are up or down, we have the liquidity and the capital ratios to support the volatility.”

However, his remarks seemed to have little effect, likely due to the grim fact that FTX has a deposit in Silvergate of at least a billion dollars. However, the California-based crypto bank insists that the stated amount represents under 10% of all deposits from digital asset customers. Furthermore, Lane noted that Silvergate had no outstanding loans or investments at FTX. In addition, the bank’s CEO said that the embattled crypto exchange does not have custody of Silvergate’s bitcoin-collateralized SEN Leverage loans.

FTX Fall

FTX declared bankruptcy earlier in the month, sending shockwaves throughout the digital asset landscape. The company’s official declaration of insolvency also threw several crypto-minded firms into a tailspin as fears of a contagion intensified.

In the wake of its collapse, FTX is also under numerous governmental investigations in the US and Bahamas. In addition, several celebrities and prominent personalities affiliated with the ill-fated crypto firm are also under ongoing probes. These include American football legend Tom Brady and Golden State Warriors marksman Stephen Curry.

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