Shares of Silvergate rose on Tuesday after the crypto bank assured investors that steps are being taken to weather FTX’s collapse despite a $1 billion loss in the final quarter of 2022.
Silvergate posted fourth-quarter results on Tuesday. Reporting A net loss of $1 billion for the latest quarter of 2022 compared with net income of $40.6 million for the third quarter and net income of $18 million for the same period a year ago.
The company posted a loss of $949 million for the entirety of 2022, compared to net income of $75.5 million in 2021. After the unveiling of FTX.
As mentioned, Silvergate faced a bank run Following the collapse of FTX, which forced the company to sell assets at a significant loss in order to honor client withdrawals worth $8.1 billion.
The crypto bank had to sell $5.2 billion of debt securities held on its balance sheet to cover approximately $8.1 billion in user withdrawals. As a result, it incurred a loss of $718 million, which reportedly exceeds the bank’s total profits since 2013.
Despite the weak report, the company’s shares rose as the bank outlined the steps it would take to weather the FTX meltdown. Silvergate said it would shed a portion of its digital-asset product portfolio and assess its pipeline of potential customers. The bank will also stop offering its crypto custody service, CEO Alan Lane said:
“While we are taking decisive action to navigate the current environment, our mission has not changed. We believe in the digital asset industry, and we remain focused on providing value-added services to our core institutional clients .
Shares of the bank were up 4.9% in premarket trading on Tuesday at $13.85 on the New York Stock Exchange. However, by the end of the trading day, the shares of the company pared some of the gains, closing the day with a gain of 0.98%.
The bank also laid off 40% of its workforce or around 200 employees at the end of 2022ö. In addition, the bank scrapped plans to launch its own digital currency and wrote off $196 million spent Facebook buys technology In his failed attempt to launch a crypto-based payment network.
Silvergate describes itself as “the leading bank for innovative businesses in fintech and cryptocurrency”. However, its core business appears to be facilitating payments between crypto hedge funds like Alameda and crypto exchanges like FTX.
It is worth noting that the crypto bank is under investigation for possibly facilitating illegal transactions. On December 6, three US senators wrote a letter to Silvergate calling for an investigation into the bank’s involvement in customer losses as the FTX exchange collapsed.
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