Crypto Bank Silvergate Reports $1B Net Loss in Q4 2022

  • Silvergate noted that a “transformational shift” in the crypto space left it with a $1.05 billion net loss for Q4 2022, and a $4,7 billion reduction in deposits compared to Q3.
  • The company is now taking action to prepare for a “sustained period of lower deposits”, such as managing its expense base and evaluating its portfolio.
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Cryptocurrency-focused bank Silvergate experienced a $1 billion net loss during the last quarter of 2022 due to investor “crisis of confidence”, the company said in a press release on 17 January.

According to the announcement, Silvergate saw significant outflows of deposits during the last quarter of 2022, and was forced to take “several actions” to maintain its cash liquidity, initially using wholesale funding and eventually selling debt securities. The company noted it is now taking action to prepare for a “sustained period of lower deposits”, such as managing its expense base and evaluating its portfolio. The CEO of Silvergate, Alan Lane, said in a statement:

“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.”

The “transformational shift” in the crypto space left the company with a $1.05 billion net loss for the fourth quarter, $751 million of which was loss on securities, and $135 million impairment charge related to an estimated $1.7 billion of securities it expects to seel in Q1 2023. Silvergate’s report also shows that the average customer deposits on the platform was $7.3 billion in Q4 2022, which is significantly lower to the $12 billion in deposits during the third quarter.

Similarly to other major digital asset-focused firms Silvergate was affected by the crypto crisis, which was fuled last year by the collapse of several crypto firms, culminating with the bankruptcy of FTX in November. As parot of its efforts to stay afloat, Silvergate laid off around 200 of its employees at the start of 2023 — roughly 40% of its total workforce — and abandoned plans to launch a new project with technology purchased from Facebook for $200 million.

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