Crypto bank Silvergate Capital Corp. stands in the second position as most-shorted stock in the United States, with over 72.5% of its shares shorted, according to the latest Short Interest Reporting from Feb. 9.
The Financial Industry Regulatory Authority (FINRA) collects and publishes twice a month short interest positions of all equity securities. A short position means investors and traders believe the price of a security, such as a stock, will decrease in value. A short seller profits from the price decline of a security.
The bank faces probes and lawsuits in the U.S. for allegedly aiding FTX on fraudulent activities, including lending and commingling user's funds. The company has been accused of "furthering FTX's investment fraud", while shareholders claim Silvergate violated the 1934 Securities Exchange Act. A Justice Department investigation is currently ongoing over the bank's role in FTX businesses.
Moody’s Investors Service recently reacted to the bank situation, downgrading ratings of Silvergate Capital and its bank to "junk", with a negative outlook for both organizations.
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