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

Crypto Bank Silvergate Posts $1 Billion Loss, Says Industry Is In ‘Crisis Of Confidence’
  • The average customer deposit in the fourth quarter of 2022 was $7.3 billion, which is far less than the $12 billion Silvergate saw in the third quarter of the same year.
  • Silvergate said the continued decline in digital asset prices and events such as the FTX bankruptcy caused investors to move into a “risk off” mode.
  • Silvergate CEO Alan Lin remained optimistic about the cryptocurrency industry, saying that the company maintains a “highly liquid balance sheet.”

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 a report from the US Securities and Exchange Commission (SEC), Silvergate said it had also 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 take decisive action 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 to our core institutional clients. To this 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.

on the flip side

  • Silvergate is currently facing a class action lawsuit over its business relationships with FTX and Alameda Research.

Why should you bother

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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