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Silvergate Capital bank forced to sell assets at loss, fires 40% of staff
Silvergate Capital faced a $8.1 billion bank run and was forced to sell assets at a loss, resulting in a $718 million loss.
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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).
