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Crypto-friendly bank Silvergate Capital has delayed its annual report and warned in an SEC filing that recent events could affect "its ability to continue as a going concern."

Why it matters: The collapse of a prominent bank in the crypto ecosystem would give regulators ammunition to scrutinize other financial institutions serving the industry, Ryan writes.

Driving the news: Silvergate said yesterday that it would be unable to file its Form 10-K report with the SEC by March 16. 

Context: Silvergate previously reported a fourth-quarter net loss of $1 billion, after the collapse of crypto exchange FTX prompted investors to pull $8 billion in the final three months of 2022.

Subsequently, the bank said it sold additional investment securities “beyond what was previously anticipated” to repay outstanding advances from the Federal Home Loan Bank (FHLB) of San Francisco.

Last year Silvergate received $4.3 billion in home loan advances from the FHLB program, a public/private system developed in the post-Depression era to backstop liquidity-strapped banks.

Between the lines: In addition to its financial troubles, Silvergate also disclosed that it is facing certain regulatory inquiries and investigations.

Reuters reported that prosecutors in the Justice Department's fraud unit were evaluating its dealings with FTX and sister firm Alameda Research.

Separately, a bipartisan group of U.S. senators has asked for more details related to its risk management practices and ties to the bankrupt crypto exchange.

What they’re saying: “These additional losses will negatively impact the regulatory capital ratios of the Company … and could result in [it] being less than well-capitalized,” Silvergate wrote in the filing.

Silvergate said it “is evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements.”

The fallout: Silvergate customers and partners were quick to move on from the troubled bank.

LedgerX, the crypto derivatives subsidiary of FTX (and one of the only units excluded from its bankruptcy process), told customers yesterday that it would no longer accept wire transfers from Silvergate.

Meanwhile, U.S.-based crypto exchange Coinbase said it would no longer accept or initiate payments to or from Silvergate, switching to Signature Bank for its Prime customers.

A Paxos spokesperson told Axios that it has discontinued all transfers and wires to its Silvergate account.

The big picture: Federal regulators were already putting pressure on crypto-friendly banks, with the Federal Reserve, OCC and FDIC issuing a joint statement in January highlighting "key risks associated with crypto-assets."

The troubles at Silvergate are likely to increase scrutiny of banks that work with crypto companies.

1 big thing: Another crypto domino 

Illustration of a digital coin crumbling on top of a column

Metrika, a blockchain monitoring platform, raised $4 million in extended Series A funding from Microsoft's venture fund, M12, and existing investor Nyca Partners, the company tells Lucinda exclusively.

Why it's the BFD: Metrika and its investors believe that financial institutions are still attracted to parts of blockchain's underlying technology, despite regulatory crackdown rippling through the industry.

Details: Metrika, which raised a $14 million Series A in 2021, has largely served crypto-native projects since its founding in 2017.

The new funding marks Metrika's expansion into the financial services sector, says CEO Nikos Andrikogiannopoulos.

"The extension and Microsoft's participation signals that we are transitioning to a different set of customers. It's where I think crypto is expecting to get widely adopted," he said.

How it works: Metrika's platform monitors whether there are errors, including human and code, on different blockchains. It aims to catch expensive operational outages before they occur.

2. The BFD: Microsoft's blockchain money 

Illustration of a pair of eyes with cubes for pupils, looking around.

BitMex founder Arthur Hayes makes a comeback (NYMag)

The once high-flying founder of BitMex is stepping back into the crypto power vacuum left by the likes of Sam Bankman-Fried, acting as a commentator and market mover.

Though BitMex is no longer leading the crypto derivatives space, it still remains a lucrative business. "His fortune fluctuates from hundreds of millions of dollars into the neighborhood of a billion, depending on prices, and he is investing it in a variety of ways," Jen Wieczner writes.

Walmart and Citi partner on SMB lending (Citigroup)

Walmart and Citi are working together on a platform that will connect  the commerce giant's 10,000 SMB suppliers with lenders. The platform will offer working capital loans, commercial mortgages, and other pre-shipment financing loans.

How a zero-fee NFT upstart is roiling big marketplaces (The Information)

Blur, a marketplace that has no transaction fees, started picking up steam in October and eclipsed OpenSea’s weekly volume by December. 

By February, nearly 80% of global NFT trading was taking place on Blur, according to data compiled by Hildebert Moulié, a data scientist at Dragonfly Capital.

3. Credit score

Illustration of a credit card headed towards a goal post to score a touchdown.

•Pennylane, a French maker of software for accounting firms, is set to raise $50m in funding led by DST Global, per Insider. . https://axios.link/3IMSpQK

• Ownera, a London-based network for tokenizing assets, raised an undisclosed amount of Series A funding from U.S. Bancorp. https://axios.link/3kyxaKD

• Euronext pulled its takeover offer to buy Allfunds Group, a fund distribution platform, for €5.5b($5.8b) in cash and stock. H&F and BNP Paribas back Allfunds. https://axios.link/3kAhB4W

• Macquarie Group (ASX: MQG) is considering a £5b-plus takeover bid for British money manager M&G (LSE: MNG), per Sky News. https://axios.link/3KNU2jH

• Purplebricks Group, a U.K.-based real estate agent, is starting a formal sale process after receiving takeover interest. The company's market cap has shrunk to below £25m. https://axios.link/3EOaixE

• Lazard Asset Management acquired Truvvo Partners, a New York-based wealth manager with $3.8b in AUM. www.truvvo.com

• Saga (LSE: SAGA) said it ended exclusive talks about selling its underwriting arm, Acromas Insurance, to Open Insurance. https://axios.link/3ZcjvYp

• TTV Capital, an Atlanta-based investor, raised $250m for its Fund VI to invest in early-stage fintechs. www.ttvcapital.com

• Figment Capital, a crypto investment firm and a spin-off of staking infrastructure provider Figment, is seeking $50m for its second fund, per The Block. https://axios.link/3y7etAA

• Chiliz of Malta launched a $50m incubator and accelerator program for early-stage blockchain projects focused on sports and entertainment. https://axios.link/3J5TZi0

• David Hoffman and Ryan Sean Adams, hosts of the popular crypto podcast and newsletter "Bankless," are raising a $35m venture fund, CoinDesk reports. https://axios.link/3FcNnMH 

4. Deals!

• Amount, a Chicago-based provider of tech to banks and financial institutions, laid off 130 employees, or 25% of its workforce. https://axios.link/3IKqocH

• Thunes, a global cross-border payments firm, named Victor Lucena as its new head of Latin America. https://axios.link/3mlbRwF

• Sinnad, a Bahrain-based card processing and payments provider, named Rana Almaeeli as its new CEO. https://axios.link/3J3VpcO

5. It's personnel

Joe Biden, but cool and sporting a mullet

6. One fun thing

@Ryan has been getting a lot more spam than usual ... and has no idea why.

@Lucinda is headed to a surprise birthday party and will return Tuesday.

Thanks to Michael Flaherty and Rob Reinalda for today's edits.

And thanks to you for reading. Please tell your fintech friends about this newsletter. They can sign up here.

March 02, 2023

1 big thing: Another crypto domino