The group is facing an unprecedented crisis of confidence since the bankruptcy of giant FTX, with most of its clients withdrawing their funds.
New big storm for the crypto industry: the name of Silvergate is on everyone’s lips. Its stock plunged 42% in Thursday’s close on the New York Stock Exchange. An event that did not go unnoticed because the Silvergate bank was first listed in New York, then at the center of the American stock markets. Secondly, Silvergate is not a cryptocurrency exchange but a bank, a cryptocurrency lender… heavily tied to FTX.
Silvergate is therefore a real bank, based in San Diego, with all that goes with it, it is a link in the American financial system. So it’s definitely a very crypto-focused bank, and at this stage we’re nowhere near as big a systemic risk as American regulators have long feared, but still.
$3.8 billion
According to financial results released on Thursday, the bank requested $12 billion in deposits in September. And there, at the last count, it had “only” 3.8 billion, or three times less, at the end of December. The group is facing an unprecedented crisis of confidence since the bankruptcy of giant FTX in mid-November, with all clients looking to withdraw their funds. Also, bad luck, Silvergate had decided to scrap Diem, Meta’s cryptocurrency project. However, this project had been a complete fiasco, there was nothing to learn from such a project. So that’s two shots for the bank.
So impairments, a real “bank run” in order. The bank is forced to cut 40% of its workforce, or 200 jobs. And this is only a preliminary report on the results, which should be published shortly thereafter. Here, Silvergate is -40% on a stock that has already closed the year 2022 with a drop of 88%. The stock is still down sharply, more than 5% higher than the market. This smacks of yet another catastrophe for the cryptocurrency industry to handle, and this time on the funding side of the ecosystem. Next appointment on January 17, with the publication of a complete report on the bank’s quarterly results.