Silvergate Shares Drop 46% as Crypto Bank Cuts over 200 Jobs

Additionally, the company stated that it is deducting its investment in the Diem project, a former Facebook stablecoin.
In a filing with the U.S. Securities and Exchange Commission on Thursday, crypto bank Silvergate Capital (SI) disclosed that it had laid off approximately 200 employees—40% of its workforce—causing its shares to fall 46% to $11.76.
The bank has also put an end to its plans to launch a digital currency and written off the $196 million it paid Meta Platforms (META), the parent company of Facebook, for the technology and assets of Diem Association. Diem, formerly known as Libra, was Facebook’s attempt to create a stablecoin, a cryptocurrency that is backed by a stable asset like the US dollar.
Diem had stated in February that Silvergate would acquire its technology and assets.
In a press release, Silvergate CEO Alan Lane stated, “We took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows” in response to the rapid changes in the digital asset industry during the fourth quarter. “We currently maintain a cash position in excess of our digital asset-related deposits.”
The industry experienced a significant decline the previous year as a result of macro headwinds and the spread of the collapse of crypto companies such as Celsius Network and FTX. The poor performance of bitcoin (BTC) and ether (ETH), the two largest cryptocurrencies by market cap, was largely to blame for the bankruptcy filings of some businesses. In 2022, both fell by more than 60%.
Despite this, the Silvergate Exchange Network continued to function, with an average daily trading volume of $1.3 billion in the fourth quarter, an increase from $1.2 billion in the third quarter.
However, during the fourth quarter, the bank saw a $8.1 billion loss in digital asset deposits. Silvergate sold debt securities worth $5.2 billion to offset the outflows, resulting in a $718 million loss.
Customers’ deposits decreased from $11.9 billion in the third quarter to $3.8 billion in the fourth.
The digital asset industry has undergone significant change. Numerous high-profile bankruptcies and a crisis of confidence across the industry have resulted from significant overleverage. Lane stated, “Many industry participants have shifted to risk-off.”