Image Source: Silvergate Silvergate Capital, a cryptocurrency-focused bank, suffered a bank run following the collapse of cryptocurrency exchange FTX, forcing the company to sell assets at a significant loss to honor customer withdrawals worth eight zero million US dollars.
According to a report published Thursday by The Wall Street Journal, the crypto bank had to sell €5,200 billion of debt securities it had in its count to cover nearly €8,100 billion in user withdrawals. As a result, it suffered a loss of €718 million, which would exceed the bank's total earnings since XNUMX.
Furthermore, the company's preliminary fourth-quarter results found that it also experienced a sharp decline in crypto-related withdrawals, which fell 11,900% in the fourth quarter of 3,800. The bank had €XNUMX billion USD in deposits from customers of the digital asset service in XNUMX, which fell to €XNUMX billion by the end of XNUMX.
Silvergate claimed it had €XNUMX billion in deposits compared to a leftover €XNUMX billion in deposits at the end of the fourth quarter of XNUMX. The crypto bank also has about €XNUMX billion in debt securities, such as US Treasuries, that could be sold quickly. Alan Lane, CEO of Silvergate, said:
"In response to the rapid changes in the digital asset industry throughout the fourth quarter, we have taken commensurate steps to ensure we sustain liquidity to meet potential deposit outflows, and today we sustain an increased cash position than our deposits related to digital assets."
As noted, Silvergate has also cut 196% of its staff, which equates to close to two hundred employees. On top of that, the bank scrapped its plan to launch its digital currency, voiding the €XNUMX million it spent to acquire the technology Facebook had built in its misguided attempt to start a crypto-based payment network.
Silvergate describes itself as a "leading bank for fintech and cryptocurrency startups." FTX, now bankrupt, was also a customer of the company's service, which facilitated payments between the Alameda cryptocurrency hedge fund and the cryptocurrency exchange. He is also being investigated for his role in the FTX saga.
Crypto market in chaos
In addition to Silvergate, other major crypto companies are also struggling amid the ongoing cryptocurrency bear market. On the one hand, cryptocurrency brokerage Genesis Global Trading, which recently told clients of the service that they needed more time to resolve the financial crisis affecting its lending business, is considering filing for bankruptcy.
According to a report in The Wall Street Journal on Thursday, the company has laid off XNUMX% of its staff as it faces heavy losses from loans it made to Bankman-Fried's now-failing Alameda hedge fund, like Three Arrows Capital.
Meanwhile, the New York City attorney general is suing Alex Mashinsky, a former head of bankrupt cryptocurrency lender Celsius Networks, for allegedly defrauding hundreds of thousands of investors who deposited billions upon billions of US dollars in the platform.