- California-based cryptocurrency bank Silvergate Capital reported a net loss of $1 billion in Q4 2022.
- Silvergate shares have lost over 70% of their value following the FTX exchange’s meltdown.
California-based cryptocurrency bank Silvergate Capital reported a $1 billion net loss attributable to shareholders in its Q4 2022 report. The report further cited a transformational shift in the crypto industry that resulted in a crisis of confidence across the ecosystem.
Silvergate Capital also announced that it would reduce its workforce by roughly 40% (or 200 people) in January 2022. This move is a bid to halt the downturn and allow the firm to navigate “a more difficult macro environment.”
The crypto bank specializes in cryptocurrency transactions, having previously worked with the now-defunct cryptocurrency exchange FTX and its sister trading firm, Alameda Research. The bank was hit with a class action suit over these dealings last month.
Silvergate Capital falls in value following FTX debacle
Silvergate Capital issued a preliminary earnings report earlier in January 2022. The report highlighted that total deposits from digital asset customers fell to $3.8 billion at the end of December 2022, down from $11.9 billion at the end of September 2022. To maintain liquidity, the company sold $5.2 billion in debt securities at a $718 million loss in the fourth quarter.
The report showed the extent of the impact on the digital asset industry due to the collapse of crypto exchange FTX. For the uninitiated, FTX filed for bankruptcy in November 2022 after failing to cover customer withdrawals.
Although Silvergate Capital previously stated that it had no outstanding loans or investments in FTX, its shares have lost over 70% of their value since the latter’s collapse. At press time, Silvergate Capital’s price was trading at $12.9, down from $39.4.
Though Silvergate reflected disappointing results, CEO Alan Lane insisted:
“While we are taking decisive actions to navigate the current environment, our mission has not changed. We believe in the digital asset industry. To that end, we are committed to maintaining a highly liquid balance sheet with a strong capital position.”