- Silvergate, a crypto-focused bank operator, announced a fourth-quarter net loss of more than $1 billion.
- The business predicts a protracted period of decreased deposits in the larger cryptocurrency market.
Just When the cryptocurrency community felt a little at peace, another disturbing piece of information about a well known firm has emerged. As the industry experienced a “crisis of confidence,” cryptocurrency-focused bank operator Silvergate announced a more than $1 billion financial loss for the fourth quarter.
According to the report, the company lost $33.16 per ordinary share. The company’s net income was $40.6 million, or $1.28 per diluted share, during this time.
As of December 31st, 2022, there were 1620 digital asset consumers who have exposure to cryptocurrencies, down from 1677 on September 30th.
A “transformational shift” in the world of digital assets was also emphasised by the corporation. Clients on cryptocurrency trading platforms were said to have taken a “risk off” stance due to a general industry credibility issue.
The reported loss was shocking but not surprising at all. Silvergate recently had to liquidate assets at a considerable loss to pay back withdrawals of about $8.1 billion due to a bank run brought on by FTX’s bankruptcy. The bank also let go 200 workers, or 40% of its workforce.
Silvergate Bank was also charged with playing a substantial role in the Sam Bankman-FTX Fried’s and Alameda Research fraud in a class-action lawsuit brought before a US court.
The bank revealed, the fall in deposits related to cryptocurrencies during the fourth quarter was 68%. Silvergate repaid the withdrawals by selling off its debt. The bank lost more money on the purchase than it had made since 2013—roughly $718 million.
The corporation stated that despite the losses, it is taking steps to get ready for a prolonged period of fewer deposits. The notice states that Silvergate is controlling its cost structure, assessing its product line, and reviewing its clientele.
Silvergate’s CEO Alan Lane stated, “Our objective has not altered, even if we are taking bold efforts to navigate the current situation. We continue to be committed to provide value-added services to our primary institutional customers because we have faith in the digital asset sector.“
All of the business’s securities that were formerly designated as held-to-maturity have been changed to available-for-sale, according to the company. As of December 31, its total securities portfolio was down to $5.7 billion.