Shares of Silvergate surged on Tuesday after the crypto bank told its investors it would take action to deal with the collapse of the FTX platform, despite posting a $1 billion loss in the final quarter of 2022.
Silvergate released its own on Tuesday results for the fourth quarter, showing a net loss of $1 billion for the fourth quarter of 2022, compared to net income of $40.6 million for the third quarter and net income of $18 million for the same period of the year previous one.
The company reports a loss of $949 million in full year 2022, compared to a net income of $75.5 million in 2021. The company’s huge losses come mainly from asset sales with a sharp decline in November last year, but also from the bankruptcy of FTX and subsequent withdrawals.
As reported in the results, Silvergate suffered a bank run following the collapse of FTX, which forced the company to sell many assets at a deeply discounted price to secure withdrawals from its users in the amount of $8.1 billion.
The cryptobank sold nearly $5.2 billion worth of debt it held to cover withdrawals. As a result, it suffered a loss of $718 million, which would exceed the bank’s total profits since 2013.
Despite the lackluster report, Silvergate’s share price rose on the news as the bank outlined the steps it intends to take to overcome the situation and the crisis caused by the fall of FTX.
Silvergate said it would spin off some of its digital asset product portfolio and reevaluate its roster of potential clients. The bank will also stop offering its cryptocurrency storage service, chief executive Alan Lane said. He adds in this regard:
“While we are taking decisive action to navigate the current environment, our mission has not changed. We believe in the digital asset industry and remain focused on our mission of providing quality services for our major institutional clients. »
The bank’s stock price rose 4.9% on the New York Stock Exchange to a price of $13.85 before trading opened on Tuesday. However, he points out that at the end of the day, the company lost some of its gains and closed up 0.98%.
The bank also laid off 40% of its staff at the end of 2022ö, or about 200 employees. Furthermore, Silvergate has abandoned its latest project to launch its own digital currency, after spending more than $196 million to acquire the technology used by Facebook in its failed attempt to create a cryptocurrency payment network.
Silvergate describes itself as one of the leading banks for companies in the fintech sector and crypto ecosystem. However, his main sources of income were notably related to the FTX trading platform and the Alameda investment fund.
It should be noted that the crypto bank is under investigation for potential facilitation of illicit transactions. On Dec. 6, three US senators wrote a letter to Silvergate investigating the bank’s involvement in customer losses during the crash of the FTX exchange.