The collapse of FTX triggered a bank run on Silvergate, forcing the financial institution to sell assets at huge losses to cover some $8.1 billion in withdrawals. The bank has also laid off 40% of its staff, or about 200 employees.
Silvergate is experiencing the aftermath of the FTX decline
according to a statement Free By the bank, crypto-related deposits declined by 68% during the fourth quarter. To cover the withdrawal, Silvergate sold its debt. The bank lost approximately $718 million on the sale, which is more than the bank’s total profit since 2013.
Silvergate said it would reduce its workforce by about 40% in response to the crypto-related fallout. It also wrote off $196 million spent on Facebook’s failed attempt to set up its digital currency network using blockchain technology.
For companies in the crypto industry, Silvergate provides various services, such as taking deposits and setting up a network that connects investors to exchanges. deposits from FTX, a company controlled by Sam Bankman-Fried, contribution About $1 billion in total bank deposits.
Still committed to crypto
Unlike most banks, Silvergate is not structured like a typical bank. Instead, it focused on providing bank accounts and services to investors and crypto exchanges. Most of its deposits come from crypto-related accounts, which account for about 90% of the bank’s total deposits.
The bank noted that it is committed to the crypto industry and has the necessary resources to handle the long period of change.
During the fourth quarter, the bank was more Cash in hand as compared to balance deposits. This amount was $4.6 billion, which was more than $3.8 billion in its accounts. It also held another $5.6 billion worth of debt securities, such as US Treasuries, which it could quickly sell. In addition, average daily volume on its network increased during the fourth quarter.
“Silvergate is taking decisive action to navigate the current environment, but its mission has not changed. Silvergate believes in the digital asset industry.”
Notably, Silvergate will report its full fourth quarter results in the coming weeks.
#Silvergate #sold #assets #loss #cover #evictions #laid #employees