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- Crypto-friendly bank Silvergate Capital reported a net loss of $1 billion in the final three months of 2022.
- That compares to the fourth quarter of 2021, when the bank reported a net income of $18 million.
- Silvergate customers pulled $8.1 billion in deposits in the fourth quarter amid FTX’s collapse.
Silvergate Capital swung to a $1 billion fourth-quarter loss on Tuesday after customers pulled billions of dollars in deposits amid FTX’s crash.
That missed Wall Street forecasts for a loss of $870 million. A year-ago, the crypto-friendly bank saw net income of $18 million.
“During the fourth quarter of 2022, the digital asset industry experienced a transformational shift, with significant overleverage in the industry leading to several high-profile bankruptcies,” Silvergate said in its earnings statement, adding that a crisis of confidence across the crypto ecosystem led investors to off-load riskier assets.
The downfall of FTX had spurred a bank run at Silvergate at the end of 2022. Earlier this month, Silvergate announced it was forced to sell assets at a loss to cover $8.1 billion in withdrawals, which it acknowledged Tuesday.
The $718 million the company lost selling debt far exceeds Silvergate’s total profits over the last decade, according to the Wall Street Journal. And at the start of January the bank slashed 40% of its staff to “account for the economic realities” at hand.
Silvergate also booked a $134.5 million charge related to $1.7 billion of securities it expects to sell in the first quarter following the massive outflows at the end of last year.
“While we are taking decisive actions to navigate the current environment, our mission has not changed,” Silvergate CEO Alan Lane said Tuesday. “We believe in the digital asset industry, and we remain focused on providing value-added services for our core institutional customers.”
Meanwhile, the company has been under scrutiny from lawmakers, with US senators led by Elizabeth Warren demanding answers from Lane regarding business dealings with FTX and Alameda Research.
In a response to lawmaker claims made to CNBC in December, the bank said it was a “victim” in the FTX saga, and plans to cooperate with ensuing investigations.
Shares of Silvergate have crashed 87% from a year ago, but on Tuesday the stock jumped 10%.