EOS and Block.One Founder Loses Millions on Silvergate Stock Investment

B. Ali
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Brendan Blumer, the founder and CEO of blockchain company Block.One, has lost over $70 million on his investment in Silvergate Capital Corp. Blumer, along with Block.One, had announced to the U.S. Securities and Exchange Commission in November 2022 that they had acquired a 9.27% stake in Silvergate’s Class A common stock.

However, just a few days after the announcement, Silvergate’s stock value plummeted by 80%.

Block.One and Blumer’s Investment

Block.One is known for its creation of the EOS.IO blockchain protocol and its associated cryptocurrency, EOS. The company has been a major player in the blockchain industry, and Blumer has been a vocal advocate for the technology. The investment in Silvergate was seen as a strategic move by Block.One to further its involvement in the cryptocurrency and blockchain space.

Factors That Influenced Brendan Blumer’s Investment in Silvergate

Brendan Blumer, CEO of Block.One and co-founder of EOS, invested in Silvergate Capital Corp in November 2022. Silvergate had established itself as a crypto-friendly bank at a time when few traditional banks were willing to serve the digital asset industry.

This reputation may have been a key factor in Blumer’s decision to invest. However, at the time of Blumer’s investment, Silvergate’s biggest account holders, FTX and Alameda Investment, had just declared bankruptcy, leading to a significant drop in the bank’s stock value.

Silvergate’s Connection to FTX and Alameda Research

Silvergate was closely connected to FTX, a cryptocurrency exchange platform that had a financial backer in Alameda Research. Just days before Block.One and Blumer’s investment, FTX declared bankruptcy and filed for the situation.

This move had a significant impact on Silvergate’s stock value, as the bank had a significant relationship with both FTX and Alameda Research.

Factors That Led Brendan Blumer to Invest in Silvergate

Brendan Blumer was attracted to Silvergate due to its reputation as a crypto-friendly bank. As few traditional banks were willing to work with the digital asset industry, Silvergate’s position as a financial institution that catered to this industry may have caught Blumer’s attention.

However, at the time of his investment, Silvergate’s biggest account holders, FTX and Alameda Investment, were facing financial difficulties, which likely contributed to the significant drop in the bank’s stock value.

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Live webinar speaker and derivatives (Forex, Crypto, and Indices) analyst with a broad range of skills for evaluating financial data, investment trends, technical analysis, fundamental analysis, and the best ways to strategies investment selection.  Expertise: Trading Psychology; Speculative Positioning & Market Sentiment; Technical & Fundamental Analysis.