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The ‘cryptobank’ Silvergate lost 877 million in 2022 after 56% of deposits withdrew

Silvergate Capital, an entity focused on bitcoin and blockchain companies and owner of Silvergate Bank, recorded losses of 948.6 million dollars (877 million euros) in 2022, compared to attributable net profit of 75.5 million dollars (70 million euros) of the previous year, affected by the crisis in the cryptographic sector, which triggered a strong outflow of deposits from the entity.

Thus, in the last quarter of the year, Silvergate suffered losses of 1,049 million dollars (970 million euros), in contrast to the gains of 18.3 million dollars (17 million euros) recorded between October and December 2021.

In the fourth quarter, the entity had deposits amounting to 6,296 million dollars (5,821 million euros), a drop of 56% compared to the 14,290 million dollars (13,211 million euros) a year earlier.

In fact, only in the last three months of 2022, Silvergate deposits fell by 52% compared to the 13,238 million dollars (12,239 million euros) recorded in September of last year.

“During the fourth quarter of 2022, the digital asset industry underwent a transformative change, with significant over-leveraging in the industry leading to several high-profile bankruptcies,” explained the entity, which attributed to this dynamic a crisis of confidence throughout the ecosystem.

“The company saw significant deposit outflows during the quarter and took several actions to maintain cash liquidity,” including wholesale financing and the sale of debt securities in order to maintain its liquid balance sheet.

“While we are taking decisive steps to navigate the current environment, our mission has not changed. We believe in the digital asset industry (…) to that end, we are committed to maintaining a highly liquid balance sheet with a strong position of capital,” said Alan Lane, CEO of Silvergate.

At the beginning of January, Silvergate announced that it will carry out a workforce adjustment that will affect 40% of its employees, which will mean the departure of some 200 people, in order to adapt to the situation in the cryptocurrency sector.

Silvergate shares, which began trading in 2019, closed this Tuesday at $13.33, after having closed 2022 at a price of $17.40, far from the more than $239 at which it was listed at end of November 2021.

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