Silvergate reports US$1 billion loss, attributes to “crisis of confidence” in crypto sector – Crypto News – Crypto News
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Silvergate reports US$1 billion loss, attributes to “crisis of confidence” in crypto sector – Crypto News

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US-based cryptocurrency bank Silvergate Capital Corp., which saw clients withdraw more than US$8 billion late last year, on Tuesday reported a US$1 billion loss for the fourth quarter of 2022a slump it attributed to a “crisis of confidence” in the sector resulting from several large bankruptcies.

See related articles: Silvergate cuts 40% of staff after covering US$8.1B withdrawals in FTX collapse

Fast facts

  • California-based Silvergate posted a loss of US$949 million for all of 2022, compared with a net income of US$75.5 million in 2021.
  • The shares fell 2.9% to $12.94 in after-hours trading on Tuesday. The stock has lost almost 90% of its value over the past 12 months.
  • “While we are taking decisive actions to navigate the current environment, our mission has not changed,” Alan Lane, Silvergate’s chief executive, said in a statement. “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.”
  • Silvergate laid off 40% of its staff, or 200 employees, in early January following the collapse of Bahamas-based crypto exchange FTX.com. That failure and others, as well as the subsequent slump in crypto prices, prompted mass withdrawals of more than US$8 billion from Silvergate. This forced the bank to sell debt at a loss of US$718 million to cover the withdrawals, the Wall Street Journal reported.
  • The run on the bank led investor Cathie Wood’s ARK Fintech Innovation exchange-traded fund to sell 99% of its shares in Silvergate shortly after, leaving the fund with fewer than 4,000 shares in the bank.
  • Coinbase Global Inc., the largest US-based crypto exchange, is also predicted to announce lower earnings. The company is expected to release its figures on Feb. 23, though it hasn’t given an official date. it said last week it would cut 950 jobs, or roughly 20% of its workforce, and shut down several riskier projects to “weather downturns in the crypto market.”

See related articles: Crypto market pain will continue but still bullish on Bitcoin lending: Silvergate

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