(Reuters) – Global ratings agency Moody’s downgraded Silvergate Capital Corp’s deposit rating to ‘Caa1’ from ‘Ba3’ on Friday, after the crypto-focused bank raised going concern doubts earlier this week.
On Wednesday, La Jolla, California-based Silvergate delayed its annual report and said it had sold additional securities to repay debts and was evaluating the impact of these events on “its ability to continue as a going concern.”
Cryptocurrency heavyweights including Coinbase Global Inc and Galaxy Digital have subsequently dropped Silvergate as their banking partner.
Silvergate reported a $1 billion loss for the fourth quarter as investors raced to withdraw deposits in the wake of crypto exchange FTX’s bankruptcy, and the firm’s troubles highlight the fragility of confidence in digital assets.
Moody’s said the Silvergate rating change reflects its “expectation that the company will continue to experience further declines in deposits, forcing it to continue selling securities, potentially at further losses.”
The bank’s ratings were also placed on review for downgrade, Moody’s said.
Silvergate did not immediately respond to a Reuters request for comment.
(Reporting by Eva Mathews in Bengaluru; Editing by Shinjini Ganguli)
