Silvergate Bank Reports $1 Billion Loss in 2022 Q4
- Silvergate, which is based in California, focuses on crypto payments and has previously collaborated with FTX and Alameda Research.
- Silvergate was hit with a class-action lawsuit for its ties with FTX in December.
- Earlier this year, Silvergate Bank announced plans to cut down its head count by 40% to help it survive the current economic situation.
Crypto-focused bank Silvergate’s most recent financial report shows that the company has been severely impacted by the current crypto bear market and industry crisis. Silvergate recorded a $1 billion net loss attributable to shareholders in 2022 Q4. The company, which is currently facing a lawsuit due to its ties with FTX, said a “transformational shift” in the cryptocurrency industry caused a “crisis of confidence across the ecosystem.”
Silvergate noted that the conditions in the industry led crypto traders to have little desire to undertake trades on platforms. According to the report, customers deposited an average of $7.3 billion in digital assets in the fourth quarter of 2022, which is less than the $12 billion deposits recorded in the third quarter of 2022.
In a report shared by the United States Securities and Exchange Commission (SEC), the bank noted that it witnessed massive outflows of deposits in the fourth quarter of 2022 and took steps to maintain cash liquidity, including wholesale funding and selling debt securities.
Although the results were disappointing, Silvergate CEO Alan Lane stated that the company’s objective has not altered and that it is still focused on offering value-added services to its primary institutional clients.
Silvergate revealed earlier this year that it would reduce its workforce by 200 employees, or about 40%, in order to slow the downturn and enable the company to operate in what it refers to as “a more challenging macro environment.”
The business also abandoned intentions to introduce a digital currency project, writing out $200 million spent on Facebook’s technology. Silvergate is currently said to have a negative outlook following the recent events.
Silvergate’s declaration comes days after New York-based crypto-focused-bank Metropolitan Commercial Bank announced its departure from the crypto industry, citing industry changes and new regulations for banks. The bank claimed the decision had no impact on its finances as it had been preparing for its departure since 2017.