Crypto Bank Silvergate Records $1 Billion in Net Loss in Last Quarter of 2024
On Tuesday, January 17, popular cryptocurrency bank silver gate announced that it faced a $1 billion net loss during the last quarter of 2022.
As we know, Silvergate has been one of those banks who had close business ties with now-defunct crypto exchange FTX along with its sister branch Alameda Research. In the latest report published by the U.S. Securities and Exchange Commission (SEC), the digital asset bank noted that it saw significant outflow of deposits during the last quarter of 2022.
As per the report, the average digital assets deposit was $7.3 billion during the fourth quarter of 2022. This was significantly lower and a 50% drop from the third quarter where the deposits were around $12 billion.
Amid the current losses, the company noted that they are preparing for a sustained period of lower deposits considering the current market conditions. To do this, Silvertgate Bank will be managing its expense base while evaluating its product portfolio and customer deposits.
Amid the significant outflows during the last quarter of 2022, Silvergate Bank noted that they have initiated actions for maintaining cash liquidity which includes selling debt securities as well as wholesale funding.
In its announcement, the company noted that there’s a “transformational shift” in the crypto space which has led to a “crisis of confidence across the ecosystem”. But despite the current challenges, Silvergate CEO Alan Lane noted that company still believes in the digital assets industry and will remain “committed to maintaining a highly liquid balance sheet with a strong capital position.”
Lane added that the firm’s “mission has not changed,” adding that the company remains focused on providing value-added services for [its] core institutional customers.”
As said, Silvergate Bank’s exposure to FTX and its sister Alameda Research has put the crypto bank in major trouble. Last month, the crypto bank was slapped with a class-action lawsuit holding it responsible for its alleged role in transferring FTX user deposits into the bank accounts of Alameda Research.
Earlier this month on January 5th, Silvergate Bank laid off nearly 200 employees, which accounted for nearly 40% of its workforce. The bank notes that the decision will help the stay afloat in the current market conditions.
On the other hand, Moody’s Investors Service have also downgraded the rating for Silvergate Bank. From the previous rating of Baa2, which was “lower-medium grade,” the rating has now dropped to Ba1, which gives it a “junk” status.