Silvergate reports 1B net loss in the fourth quarter of 2022Silvergate Bank, currently involved in a class-action lawsuit regarding its FTX and Alameda Research proceedings, has declared an alarming net loss of $1 billion for common shareholders during the fourth quarter of 2022.
The United States Securities and Exchange Commission (SEC) published a report in which the digital asset bank noted that during the fourth quarter of 2022, deposits experienced substantial outflows. The bank offered wholesale funding services and sold debt securities to keep cash liquidity flowing.
In addition, the company emphasized an “overhaul” in the digital asset sector. Also, they stated that customers resorted to reducing their risks while trading on crypto platforms due to a crisis of trust across the ecosystem. The report outlined a dramatic decrease in the average digital asset customer deposits for the fourth quarter of 2022, which fell to $7.3 billion compared to the third quarter’s impressive figure of $12 billion.
Silvergate is taking strides to prepare for an extended period of fewer deposits despite the losses. In a recent statement, they declared that they are controlling their expense base and assessing their product line-up and customer ties. Also, Silvergate CEO Alan Lane expressed that they are still devoted to sustaining a highly liquid balance sheet with an outstanding capital position and remain optimistic about the digital asset industry, despite the difficulties surrounding them.
On the 5th of January, the organization let go of around 200 employees, which amounted to 40% of its staff, to remain operational. To add, they also halted plans for a digital currency project and wrote off $200 million invested into technology owned by Facebook.
In response to the situation, Moody’s Investors Service drastically downgraded Silvergate Bank from a Baa2 rating of “lower-medium grade” to Ba1, considered “junk.” Additionally, they indicated that the prospects for Silvergate Capital and its bank are bleak.
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