Home - Regulation - MicroStrategy unveils minimal Silvergate exposure

James Carter

March 4, 2023

MicroStrategy unveils minimal Silvergate exposure

MicroStrategy, a company that specializes in business intelligence, has acknowledged that it will receive a loan from Silvergate, but the company claims that the repayment period will not begin for several more years. The business went on to say that it does not have any concerns regarding Silvergate’s current financial situation and that it will not be looking to accelerate the loan.

Debt in the amount of $205 million was obtained by MicroStrategy from Silvergate through the latter’s MicroStrategy subsidiary. The processing of this credit arrangement took place in March 2022. Given the current state of Silvergate’s finances, the business has now stated publicly that it is not concerned about the loan agreement, despite the fact that it is aware of the situation.

MicroStrategy unveils minimal Silvergate exposure

The company that provides business intelligence services announced that it would not speed up the repayment of the $205 million debt. Instead, it will continue to adhere to the tenure that was originally agreed upon for Q1 2025. MicroStrategy has also indicated that it is not exposed to the troubled cryptocurrency bank in any further capacity.

The company stated in a tweet that “our BTC collateral isn’t custodied by Silvergate, and we have no other financial relationship with Silvergate.” The message was published by the company.

Also Read:  European vs. U.S. Crypto Regulation

Bitcoin is included in MicroStrategy’s corporate financial sheet as an asset. The company is the largest corporate holder of Bitcoin (BTC) and presently possesses more than 130,000 Bitcoins. At the current spot price of Bitcoin, this amount is equivalent to $2.9 billion USD.

Silvergate in crisis

A new problem has arisen for the already troubled Silvergate, and MicroStrategy has just released a statement about it. Since the failure of the FTX cryptocurrency exchange, the crypto bank’s financial situation has worsened dramatically, and the bank itself is in jeopardy.

Silvergate is presently the focus of a number of investigations being conducted in the United States, as well as a class action lawsuit for money laundering. In addition to this, the bank is being investigated by legislators on Capitol Hill.

Circle and Coinbase are just two of the many American cryptocurrency companies that have abandoned the cryptocurrency bank. Because of the many legal and regulatory issues the bank is facing, and these businesses have decided to sever their ties with it.

The failure of Silvergate to publish its financial report has resulted in a decline in investor confidence, which has led to a present decline of more than 50 percent in the value of the bank’s shares.

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