Silvergate, the bank specializing in digital assets, has resorted to laying off 40% of its staff. At the same time, the company had to sell assets to stabilize its balance sheet, resulting in losses of $718 million.
Silvergate ends 2022 with inconclusive results
Silvergate, the well-known institutional player specializing in digital assets, said yes it laid off 200 people on Jan. 4, representing 40% of its workforce. This announcement comes ahead of the release of its data for the fourth quarter of 2022, and the company has already released several important data.
To execute these layoffs, the company spent $8 millionwhich mainly include severance pay and other social benefits.
As for client deposits, while they totaled $11.9 billion as of September 30, this same metric saw a significant decline three months later, now equal to $3.8 billion. This therefore equates to a 68% reduction.
It should also be noted that among all these deposits, $150 million came from customers who are now bankrupt.
Additionally, Silvergate was forced to sell at a loss to maintain a healthy balance sheet. These sales represent $5.2 billion in assets, and resulted in a loss of $718 million for the company in the last quarter of 2022.
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Diem: Targets revised downwards after asset purchase
In early 2022, Meta sold Diem’s assets to Silvergate after encountering multiple difficulties building its stablecoin project. Today, Silvergate has shelved its ambitions to build a blockchain-based payments system, and sees affected assets depreciate by $196 million.
This downward reconsideration of the company’s ambitions is justified by the current context of the cryptocurrency ecosystem:
“Given the significant changes in the digital asset industry landscape, this charge reflects the company’s belief that Silvergate’s rollout of a blockchain-based payment solution is no longer imminent. The company will continue to seek opportunities to deliver value from these technology assets. »
Despite all this negative news, Silvergate still has it own liquidity of $4.6 billion. Therefore, these are not the times for a liquidity crisis, which should in any case reassure investors, while some time ago the company had to communicate on BlockFi. Indeed, the latter went bankrupt in the wake of the FTX affair, and Silvergate was exposed to it in the amount of $20 million.
At the time of writing, Silvergate shares were trading priced at $21.95 on the New York Stock Exchange.
👉 Also in the news: Cryptocurrency payments expert Wyre will soon go bankrupt
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