George Soros’s Family Office Bets Against Crypto Bank Silvergate

Max Reyes, Bloomberg News

George Soros speaks at the World Economic Forum in Davos, Switzerland, on May 24, 2022. , Photographer: Jason Alden/Bloomberg

(Bloomberg) -- Billionaire George Soros’s family office disclosed a bet against Silvergate Capital Corp., a bank facing increasing public scrutiny over its ties to Sam Bankman-Fried’s bankrupt business empire and the broader cryptocurrency industry.

Soros Fund Management held put options on 100,000 shares of Silvergate, with a market value of $1.74 million, as of Dec. 31, according to a regulatory filing. The trade would turn a profit should shares drop beneath a certain level that wasn’t disclosed in the filing, and no expiration date for the options was given.

Soros Fund Management, based in New York, didn’t immediately respond to a request for comment. La Jolla, California-based Silvergate declined to comment.

While the Soros position is small, it’s the latest sign that investors are souring on Silvergate. Almost 67% of the bank’s shares available for trading are sold short, making it one of the most-shorted stocks among publicly traded companies of its size in the US, data compiled by Bloomberg show. The shares have fallen almost 90% since the start of 2022, and are down 11% so far this year.

Silvergate is facing a criminal probe by US prosecutors in the Justice Department’s fraud unit into its dealings with Bankman-Fried’s exchange FTX and its sister hedge fund Alameda Research, Bloomberg reported earlier this month, citing people familiar with the matter.

Separately, a bipartisan group of Senators last month asked Silvergate to answer questions about what information it had on FTX’s alleged misuse of customers funds and said previous answers on the subject were “evasive and incomplete.”

Soros became a household name after famously betting against the British pound in 1992, helping to force the currency out of the exchange-rate system that preceded the euro. He earned $1 billion from his huge short positions as the currency crashed in what became known as Black Wednesday, a disaster from which the government at the time couldn’t recover.

With a net worth of $8.5 billion, the 92-year-old Soros is the world’s 253rd wealthiest person, according to the Bloomberg Billionaires Index.

Meanwhile, market maker Citadel Securities disclosed shared voting power in 1.73 million Silvergate shares, or 5.5% of the bank, as of Dec. 31, according to a regulatory filing. That filing was triggered by the firm’s options market-making activity, and Citadel Securities doesn’t have a directional investment in Silvergate, a Citadel Securities representative said.

--With assistance from Matt Turner and Katherine Doherty.

(Updates with Citadel Securities details in last paragraph.)