Crypto-Focused Bank Silvergate Slashes 40% Workforce, Abandons Several Projects
The FTX collapse has accelerated lay-offs as the sector struggles to weather the incessant turmoil.
Crypto-focused bank – Silvergate Capital – has become the latest to slash 40% of its workforce, which is around 200 employees, according to a Wall Street Journal report on Thursday.
The news comes as the bank experienced massive customer withdrawals. In a statement, Silvergate said,
“As we enter a new year and continue to navigate the current environment, we are focusing our strategy to provide the most value-added solutions for our core digital asset customers.”
- In an early release of a part of Silvergate’s fourth quarterly results, the bank said that crypto-related deposits fell by a major 68% from $11.9 billion to $3.8 billion.
- By the end of 2022, $150 million of Silvergae’s deposits were held by customers who had filed for bankruptcy protection.
- There was a cash crunch during this period. As a result, it resorted to liquidating the debt it was holding on its balance sheet to satisfy withdrawals. In the process, the company lost $718 million, which far exceeded its total profits since 2013.
- The California-based company is also planning to scrap the launch of its own digital currency project, writing off the $196 million that it paid social media giant Facebook to purchase the tech it built for the Diem project.
- Following the business update, Silvergate stock plunged by over 47% in premarket trading.
- FTX’s bankruptcy sent Silvergate on a bank run which forced the platform to sell assets at a significant loss to cover some $8.1 billion in withdrawals.
- Dented investor confidence meant a steep decline in deposits. But Silvergate could operate around such turbulent times because it is structured very differently from most banks.
- Despite the downturn, the bank assured its customers that it has sufficient funding to handle a “sustained period of transformation.”
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