Silvergate Capital was forced to sell assets at a loss in order to cover an $8.1 billion bank run.

In response to the crisis, Silvergate laid off approximately 200 employees — 40% of its staff — and announced plans to “pare back its businesses,” according to The Wallstreet Journal.

Silvergate liquidated debt held on its balance sheet, resulting in a loss of $718 million — exceeding “the bank’s total profits since at least 2013.”

Silvergate primarily serves companies within the crypto industry, taking deposits and operating a network that connects crypto exchanges to investors.

“FTX and other companies controlled by its founder, Sam Bankman-Fried, accounted for about $1 billion of the bank’s deposits.”

Unlike other banks, Silvergate uses a business model focused on providing bank accounts to crypto exchanges and investors — with crypto-related deposits equating to roughly 90% of the bank’s total. It is for this reason that Silvergate was able to endure the “steep decline in deposits.”

In a statement, Silvergate said:

“As we enter a new year and continue to navigate the current environment, we are focusing our strategy to provide the most value-added solutions for our core digital asset customers.”

At the end of the fourth quarter of 2022, Silvergate said it had roughly $4.6 billion “on hand,” which is more than the “$3.8 billion in remaining deposits.”

Recently hit with a class action lawsuit, Silvergate has come under fire for its relationship with FTX founder Sam Bankman-Fried (SBF).

The post Silvergate Capital bank forced to sell assets at loss, fires 40% of staff appeared first on CryptoSlate.

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Filed under: Bitcoin - @ January 5, 2023 2:10 pm