Representations of cryptocurrencies Bitcoin, Ethereum and DogeCoin are placed on PC motherboard in this illustration taken, June 29, 2021. [Source: Reuters]

Cryptocurrency-focused lender Silvergate Capital warned it was delaying its annual report and said it was evaluating its ability to operate as a going concern on Wednesday, sending its shares down by more than a quarter in after-hours trading.

Silvergate reported a $1 billion loss for the fourth quarter as investors raced to withdraw deposits in the wake of crypto exchange FTX’s bankruptcy, and the firm’s troubles highlight the fragility of confidence in digital assets.

The company said it would be unable to meet an extended March 16 deadline for submitting its annual report. It also said, in a filing to the Securities and Exchange Commission, that it had sold additional debt securities to repay debts this year and that further losses mean the bank could be “less than well capitalized”.

Silvergate “is evaluating the impact that these subsequent events have on its ability to continue as a going concern,” it said. “The Company is currently in the process of re-evaluating its businesses and strategies in light of the business and regulatory challenges it currently faces.”

Shares fell nearly 32% to $9.24 in after-hours trade, and suggest the stock could open at a three-year low on Thursday.

Silvergate’s stock has plummeted about 96% from its record high close in November 2021.

Federal prosecutors in Washington are probing the La Jolla, Calif.-based Silvergate and its dealings with FTX and trading firm Alameda Research. In January, three U.S. senators asked Silvergate for details about its risk management and FTX.

Wayne Huang, co-founder and CEO of XREX, a global USD-crypto exchange headquartered in Taipei, said the issues highlighted how interconnected and vulnerable crypto banking had become.

Global cryptocurrency exchange Binance had secret access to an account at Silvergate belonging to its purportedly independent U.S. partner and transferred large sums of money from the account to a trading firm managed by Binance CEO Changpeng Zhao, Reuters reported last month.