What happened

After surging by 54% on Friday, shares of the crypto bank Silvergate Capital (SI 9.76%) were once again on the rise on Monday. At one point during the morning, shares were trading more than 42% higher.

However, as of 12:44 p.m. ET Monday, the stock had given up most of those gains and was trading roughly 13% higher. These gains came despite the fact that the bank said earlier this month that it plans to wind down its operations and liquidate its assets.

So what

In a regulatory filing Monday morning, Silvergate said that it had received full repayment for an outstanding secured term loan of $205 million that it had made to MacroStrategy, a subsidiary of the business intelligence company and Bitcoin buyer MicroStrategy.

This had been a part of Silvergate's SEN Leverage program, which issued lines of credit collateralized by Bitcoin. The full prepayment amount was $161 million, and Silvergate waived the prepayment charge pursuant to the credit agreement.

From December through February, Silvergate experienced a significant run on deposits, and as a result, is now winding down its operations. The bank ran a real-time payments system that facilitated crypto transactions for crypto exchanges and institutional traders.

Silvergate began to run into problems last year after FTX, which had been one of its bigger clients, went bankrupt following a massive scandal regarding the company's misuse of customer funds and numerous other regulatory violations. After that, many of Silvergate's clients fled the bank in a crisis of confidence, which forced it to sell bonds while they were trading at steep losses to cover the deposit outflows, wiping out a substantial amount of shareholder equity.

Now what

The repayment of this loan may further support a liquidation scenario for Silvergate. Analysts have previously estimated that the bank may have a liquidation value of $5 per share, but shares are currently hovering just over $2.

Silvergate Capital is also apparently still heavily shorted, so some type of short squeeze may be partially driving the recent aggressive movement of the stock.

While there may be some kind of potential upside here through the liquidation, I am going to avoid this stock because I am still unclear about what kind of regulatory consequences (if any) Silvergate may face due to its relationship with FTX. Liquidation scenarios can also be difficult to forecast.