Silvergate Capital lost almost $1 billion in Q4 due to the FTX crash's cryptocurrency market turmoil.
The California bank stated that it lost a lot of deposits during the quarter and has taken actions to increase its liquidity.
market as a result of the FTX crash, according to Silvergate Capital, cost it more than $1 billion in Q4.
A bank that specializes in virtual currencies, Silvergate Capital, recorded a loss of $1.05 billion in the fourth quarter of 2022, after reporting a profit of $18.4 million at the same time a year earlier. Silvergate lost $33.16 on a per-share basis, down from a profit of 66 cents a year earlier due to a spate of high-profile bankruptcies that rattled the cryptocurrency industry and caused a flood of withdrawals at the bank.
The California-based bank disclosed that it lost a significant amount of deposits during the quarter and that it has taken steps to increase its liquidity, including letting go of over 40% of its personnel. In its official announcement, Silvergate predicted that the overall crypto market will experience a protracted period of decreased deposits.
According to Alan Lane, CEO of Silvergate, "Our goal has not altered, even if we are taking bold efforts to manage the current climate." We have faith in the market for digital assets. In order to do this, we are dedicated to keeping a very liquid balance sheet and a strong capital position.
The corporation reportedly sold debt instruments valued at $5.2 billion during the quarter, reporting a loss of $751.3 million on the deal. In addition, it disclosed a 134.5 million dollar impairment charge relating to the 1.7 billion dollar worth of securities that it intends to sell this quarter in order to pay down its borrowings.
Silvergate Capital Corp. experienced a run after the cryptocurrency exchange FTX went under, forcing the bank to sell assets at a significant loss to cover the roughly $8.1 billion in withdrawals. The bank was forced to liquidate assets as a result of the rush. Additionally, Silvergate suffered the same effects as other companies from the contagion brought by the collapse of well-known cryptocurrency companies in 2022, which produced a sharp slump in the sector that peaked in November.
Silvergate's share is currently trading at a pre-market valuation of $14, which is a tremendous 5.4% increase in comparison to its 40% one-day decline, recorded during the first week of January. This is true even in the face of the poor Q4 data.
