Silvergate Bank Reports $1 Billion Loss Amid Crisis of Confidence in Virtual Currency Industry Following Collapse of Virtual Currency Exchange FTX
Silvergate Bank reported a $1 billion loss in the fourth quarter of 2022 amid a crisis of confidence in the virtual currency industry caused by the collapse of virtual currency exchange FTX.
The California-based bank said the losses were primarily driven by asset sales, a forced move following the collapse of the virtual currency exchange. Silvergate also said it will redesign and clean up some of its digital asset products and evaluate potential digital asset customer flows.
We are acting decisively to address the current situation, but our mission has not changed,” he said. We believe in the digital asset industry and remain focused on providing value-added services to our core institutional clients,” said CEO Alan Lane.
According to the report, as of December 31, average customer deposits, including digital assets, totaled $7.3 billion, up from an average of $12 billion in the previous quarter. The bank also said the sale resulted in a loss of $751.4 million; Silvergate reported a loss of $134.5 million due to impairment charges. They covered about $1.7 billion in securities, which the bank plans to sell in the first quarter of 2023 to reduce borrowing.
The demise of FTX has created a crisis for Silvergate. This is because the bank held deposits from Alameda Research, the trading firm behind the demise of FTX and the cryptocurrency exchange. As a result, the bank announced earlier this month that it would lay off 40% of its staff as customers received approximately $8.1 billion in digital asset deposits during the last three months of 2022, forcing the bank to sell securities and related derivatives. Losses.
Many banks faced an outflow of digital currency deposits at the end of 2022. Market participants believethis sentiment will continue as volatility in the virtual currency market will continue after the collapse of the FTX. All results not available for download. Retry…