Crypto bank Silvergate sees its share value fall as the crypto bear market continues to plague the sector.
Silvergate Capital Corp, a crypto-focused bank, has reported a significant drop in its fourth-quarter crypto-related deposits and announced plans to cut its workforce by 40%, or approximately 200 employees. This news comes as the company's shares have lost 88% of their value in 2022 and were down 40% in premarket trading.
According to a report by Reuters, preliminary earnings highlight that total deposits from digital asset customers declined to $3.8 billion at the end of December 2022, compared with $11.9 billion at the end of September 2022. In order to maintain liquidity, the bank sold $5.2 billion of debt securities in the fourth quarter, incurring a loss of $718 million.
The decline in the crypto sector, which saw over $1 trillion wiped out in value last year, has been attributed to rising interest rates and concerns of an economic downturn. The crash has also led to the demise of key industry players including crypto hedge funds, lending platforms, and exchanges.
A more recent calamity in the sector came when major crypto exchange FTX filed for bankruptcy protection in November, leading to increased regulatory scrutiny of how crypto firms hold funds and conduct business operations. Silvergate has also faced regulatory scrutiny in the wake of the FTX collapse.
Despite experiencing rapid growth in 2020 and 2021, bitcoin, the most popular digital currency, saw widespread declines last year, affecting the entire crypto industry.
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