Silvergate Tumble – Silvergate is Forced to Sell Assets 📉

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Silvergate Tumble – Silvergate is Forced to Sell Assets

Crypto-focused US bank Silvergate has been forced to sell assets after clients withdrew $8.1bn in deposits in late 2022. The California-based company’s deposits fell to $3.8bn on 31 December from $11.9bn at the end of September, causing its shares to drop 40% in pre-market trading in New York. Silvergate, a Federal Reserve member bank listed on the NYSE, has come under pressure as crypto asset prices have fallen and several big players have gone bankrupt. In a provisional Q4 earnings report, Silvergate said it sold $5.2bn of debt securities at a loss of $718m to meet customer withdrawals and raise cash. It added that $150m of its deposits were from customers that had filed for bankruptcy.

The bank also announced that it is cutting 200 employees, or 40% of its staff, due to the “economic realities” facing the cryptocurrency industry and its business. Silvergate reported holding $4.6bn in cash and equivalents, more than its deposits, and $5.6bn in US government and agency-backed debt. The company plans to sell “a portion” of this debt in early 2023. Silvergate’s full quarterly and annual earnings report will be released on 17 January. The bank is also facing scrutiny from US lawmakers, with Senators including Elizabeth Warren writing to CEO Alan Lane in December to request clarity on Silvergate’s role in accepting customer deposits for crypto investment firm Alameda Research, which were ultimately intended for the FTX exchange.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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