Silvergate Capital Corp., a U.S.-based cryptocurrency bank, reported a loss of $1 billion for the fourth quarter of 2022, due to a “crisis of confidence” in the sector resulting from several large bankruptcies.
The California-based bank posted a loss of $949 million for all of 2022, compared to net income of $75.5 million in 2021.
The bank’s shares fell 2.9% to $12.94 in after-hours trading on Tuesday, and have lost almost 90% of their value over the past 12 months.
Silvergate laid off 40% of its staff, or 200 employees, in early January after the collapse of Bahamas-based crypto exchange FTX.com.
This, along with other failures and the subsequent slump in crypto prices, prompted mass withdrawals of more than $8 billion from Silvergate.
This forced the bank to sell debt at a loss of $718 million to cover the withdrawals. The run on the bank led investor Cathie Wood’s ARK Fintech Innovation exchange-traded fund to sell 99% of its shares in Silvergate shortly after.
Coinbase Global Inc., the largest U.S.-based crypto exchange, is also expected to announce lower earnings.
The company is expected to release its figures on Feb. 23, though it hasn’t given an official date. It announced last week it would cut 950 jobs, or roughly 20% of its workforce, and shut down several riskier projects to “weather downturns in the crypto market.”
Despite the current difficult market conditions, Silvergate’s CEO, Alan Lane, stated in a statement that “we believe in the digital asset industry, and we remain focused on providing value-added services for our core institutional customers. To that end, we are committed to maintaining a highly liquid balance sheet with a strong capital position.”
