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Silvergate Bank, which is currently facing class action lawsuits over the FTX and Alameda transactions, has announced a net loss of $1 billion attributable to common shareholders in the fourth quarter of 2022.
A report issued by the U.S. Securities and Exchange Commission (SEC) states that digital asset banks highlight We saw significant deposit outflows in the fourth quarter of 2022 and took steps to preserve cash liquidity, including large funding and sale of debt securities.
The company also noted that there has been a transformative change within the digital asset space, noting that a crisis of trust across the ecosystem has led customers to take a risk-off position on crypto trading platforms. bottom.
Average digital asset customer deposits in Q4 2022 were $7.3 billion, according to the report. This is significantly lower than in the third quarter of 2022, when deposits were around $12 billion.
Despite the loss, the company said it was taking steps to prepare for a period of continued decline in deposits. According to the announcement, Silvergate manages its expense base and evaluates its product portfolio and customer relationships.
Among the challenges, Silvergate CEO Alan Lane emphasized that the company still believes in the digital asset industry and is “committed to maintaining a highly liquid balance sheet with a strong capital position.” bottom.
Related: Silvergate has filed another class action lawsuit. This is a violation of securities laws.
On January 5, the company laid off about 200 employees, about 40% of its workforce, in an effort to keep its business running. In addition, the company also shelved plans to launch a digital currency project, writing off his $200 million he used to buy Facebook-developed technology.
In response to the situation, rating agency Moody’s Investors Service downgraded Silvergate Bank. The rating went from his Baa2 of ‘low-mid’ to Ba1 which is considered ‘junk’. Separately, Moody’s also highlighted the negative outlook for both Silvergate Capital and its bank.
