Crypto Bank Silvergate Posts $1 Billion Loss, Says Industry Has ‘Crisis Of Confidence’

Silvergate, the crypto-focused bank, announced Tuesday that it suffered a net loss of $1 billion attributable to common shareholders in the fourth quarter of 2022.

in Report Released by the US Securities and Exchange Commission (SEC), Silvergate also said it had seen “significant” inflows of deposits. Customer deposits in the fourth quarter averaged $22 at $7.3 billion, down from $12 billion in the third quarter of the same year.

Silvergate said that the main reason for the outflows is the “crisis of confidence” that the cryptocurrency industry is currently experiencing. The bank said that events such as the FTX bankruptcy, along with a general decline in digital asset prices, had caused investors to switch to a “risk-off” mode.

However, Silvergate still believes in the crypto industry. The bank’s chief executive Alan Lane said the company remains “focused” and maintains a “highly liquid balance sheet”.

“While we are taking decisive actions to navigate the current environment, our mission has not changed. We believe in the digital asset industry, and we remain focused on providing value-added services for our core institutional customers. To that end, we are committed to maintaining a highly liquid balance sheet with a strong capital position,” he said.

Crucial measures Lane points to include wholesale financing and the sale of debt securities to absorb “continuously low deposit levels”. On top of that, Silvergate has cut its workforce by about 40%, or 200 employees.

Silvergate is also managing its expense base and evaluating its product portfolio and customer relationships going forward.

Silvergate is perhaps the largest cryptocurrency-focused bank in the world. Its large losses in the last quarter of 2022 indicate what crypto companies are currently going through.

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