Just-In: This Crypto-Focused Bank Lost $1 Billion Due To FTX Collapse
Silvergate Capital, a bank that specializes in virtual currencies, reported a loss of $1.05 billion in the fourth quarter of 2022; although at the same time a year earlier, it had reported a profit of $18.4 million. As a result of a string of high-profile bankruptcies that shook the crypto industry and prompted a deluge The post Just-In: This Crypto-Focused Bank Lost $1 Billion Due To FTX Collapse appeared first on CoinGape.
Silvergate Capital, a bank that specializes in virtual currencies, reported a loss of $1.05 billion in the fourth quarter of 2022; although at the same time a year earlier, it had reported a profit of $18.4 million. As a result of a string of high-profile bankruptcies that shook the crypto industry and prompted a deluge of withdrawals at the bank, Silvergate lost $33.16 on a per-share basis, compared to a profit of 66 cents a year prior.
Silvergate’s Net Loss At $1 Billion
The California-based bank reported that it suffered large losses in deposits over the course of the quarter & that it has taken measures to shore up its liquidity, including laying off almost 40% of its workforce. According to Silvergate’s official statement, the company anticipates a prolonged period of reduced deposits across the broader crypto market.
Silvergate CEO Alan Lane was quoted as saying:
While we are taking decisive actions to navigate the current environment, our mission has not changed. We believe in the digital asset industry. To that end, we are committed to maintaining a highly liquid balance sheet with a strong capital position.
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According to Silvergate’s report, the company sold $5.2 billion worth of debt securities during the quarter and reported a loss of $751.4 million on the transaction. In addition to this, it reported an impairment charge of 134.5 million dollars related to the 1.7 billion dollars worth of securities that it plans to sell during the current quarter in order to lower its borrowings.
The FTX Contagion
The collapse of the cryptocurrency exchange FTX precipitated a run on Silvergate Capital Corp., which required the bank to sell assets at a considerable loss in order to satisfy the approximately $8.1 billion in withdrawals. As a result of the rush, the bank was obliged to liquidate assets. And, similar to others, Silvergate was shaken by the contagion caused by the failure of high-profile cryptocurrency firms in 2022, leading to a large decline in the industry, that reached its lowest in November.
Even with the unfavorable Q4 statistics, Silvergate’s (SI) stock is currently trading at a pre-market valuation of $14, which is a whopping 5.8% increase in comparison to its 40% one-day decline, witnessed during the first week of January.
Also Read: Why Did This Crypto Suddenly Surge 300% In Trading Volume Today?
The post Just-In: This Crypto-Focused Bank Lost $1 Billion Due To FTX Collapse appeared first on CoinGape.
