Silvergate Capitalannounced that it had to sell its assets at a loss to cover a bank run of $8.1 billion. According to The Wallstreet Journal, in response to the crisis, Silvergate laid off about 200 employees (40% of its staff) and announced plans to “cut jobs”.
Silvergate made a loss of $718 million by liquidating debt on its balance sheet, exceeding “the bank’s total profit since at least 2013.” Silvergate mostly serves companies in the crypto industry, accepts deposits and operates a network that connects crypto exchanges to investors.
FTX and other companies controlled by founder Sam Bankman-Fried made up about $1 billion of the bank’s deposits.
Unlike other banks, Silvergate adopts a business model that focuses on providing bank accounts to crypto exchanges and investors. Silvergate was able to withstand the “drastic drop in deposits” because cryptocurrency-related deposits account for about 90% of the bank’s total.
Silvergate made the following statement on the subject:
As we enter a new year and continue to find our way in the current environment, we focus our strategy on delivering the most value-added solutions for our core digital asset clients.
NEWS CONTINUES BELOW
Silvergate said it had “about $4.6 billion,” which is more than “$3.8 billion in deposits remaining” late last year.
Silvergate, which recently faced a class action lawsuit, has been plagued by problems over its relationship with FTX founder Sam Bankman-Fried (SBF).