Silvergate has reportedly laid off 200 members of its staff, which is around 40% of its total number of employees.
In order to cover client withdrawals totaling $8.1 billion, Silvergate had to sell off its assets at a loss and reduce employees by 40% as a result of the FTX fiasco.
The bank lost $718 million by selling debt that it had been holding on its balance sheet in order to keep up with withdrawals, according to a story in The Wall Street Journal.
According to reports, the loss exceeds the company’s profits since 2013. Additionally, the firm’s crypto-related deposits fell by 68% in the final quarter of 2017.
Due to this, Silvergate let go of 200 employees, or 40% of the whole workforce. Additionally, the bank abandoned plans to introduce its own digital currency, paying out nearly $200 million it paid Facebook to acquire the technology it developed for the Diem project.
Despite this, the bank says it is still committed to cryptocurrencies and that it has the resources necessary to manage a transition period. In order to handle the current market environment, the bank emphasized that it is “taking decisive action.”
Congressmen in the US have been investigating the bank due of its connections to FTX and Alameda Research. On December 6, three U.S. senators sent a letter to Silvergate requesting information about the bank’s role in client losses brought on by the collapse of the FTX exchange.
According to the letter, the company’s involvement in transferring FTX customers’ funds to Alameda appears to be a failure on its part to watch over and report suspicious activities.
In an effort to hold Silvergate accountable for its claimed roles in the theft of FTX client monies, a class-action complaint was launched against Silvergate on December 16. The bank was accused of contributing to “furthering FTX’s investment fraud,” according to the lawsuit
