According to reports from Silvergate, deposits were $7.3 billion in the fourth quarter, which was less than the $12 billion recorded in the third quarter.
A class action lawsuit against Silvergate Bank regarding its interactions with FTX and Alameda Research is now pending, and the bank just disclosed a fourth-quarter 2022 net loss of $1 billion attributable to common stockholders.
The digital asset bank noted in a Securities and Exchange Commission (SEC) report that it had significant deposit outflows in the fourth quarter of 2022 and took steps to maintain cash liquidity, including selling debt securities and securing wholesale funding.
A “transformational shift” in the world of digital assets was also emphasized by the corporation. Customers on cryptocurrency trading platforms were said to have taken a “risk off” stance due to a general ecosystem confidence issue.
The report states that in the fourth quarter of 2022, customers deposited an average of $7.3 billion in digital assets. When compared to the third quarter of 2022, when deposits were about $12 billion, this is much less.
The corporation stated that despite the losses, it is taking steps to get ready for a prolonged period of fewer deposits. The notice states that Silvergate is controlling its cost structure, assessing its product line, and reviewing its clientele.
Despite the difficulties, Silvergate CEO Alan Lane emphasized that the company is “dedicated to maintaining a highly liquid balance sheet with a solid capital position” and that it still has faith in the digital asset sector.
On Jan.5, the company laid off over 200 people, which accounted for nearly 40% of its employment, as part of its efforts to stay alive. The business recently abandoned plans to introduce a digital currency initiative, wiping out $200 million spent on Facebook-developed technology.
In response to the circumstance, rating agency Moody’s Investors Service lowered Silvergate Bank’s rating. From Baa2, which was “lower-medium grade,” to Ba1, which is “junk,” the rating changed. Additionally, Moody’s emphasized that Silvergate Capital and its bank have a poor outlook.