Silvergate Bank, which is focused on activities in the field of cryptocurrencies, reported a loss of $ 1 billion in the fourth quarter of 2022.
Crypto-focussed bank Silvergate has posted a $1 billion loss for the fourth quarter. Source: Pixabay.com
The financial organization also announced the dismissal of 200 employees. The decision to reduce the number of employees was made due to the difficult financial situation.
The Bank is trying to cope with the challenges caused by the crisis phenomena in the global economy and the deterioration of the situation in the field of cryptocurrencies. The financial institution will not serve some customers. The bank’s management explains this decision as a necessary measure to cope with the consequences of the collapse of the FTX crypto exchange.
The bank held deposits for FTX and Almeda Research companies. After the collapse of the crypto exchange, the clients of the financial institution withdrew more than $ 8 billion from deposits in digital assets. Also, the FTX bankruptcy has reduced the level of confidence in the industry. This circumstance has reduced the volume of financial injections into the area.
Due to the current situation, Silvergate had to sell assets with a total value of $ 5.2 billion. This measure was necessary in order to cover expenses and maintain liquidity. All the bank’s actions at the end of 2022 caused losses. But there was no other choice in this situation.
The Bank announced preparations for a long period of transformation. Silvergate will stop providing services to some non-core customers. The bank will also reduce its product portfolio.
Alan Lane, CEO of Silvergate, said that the bank’s mission remains the same. He called radical measures necessary to navigate in the current conditions. The director of the bank also stated that he continues to believe in the prospects of the digital asset industry.
