Silvergate Capital shares fall as crypto-related filings plunge

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By Manya Saini and Niket Nishant

(Reuters) – Silvergate Capital Corp reported a sharp drop in crypto-related deposits in the fourth quarter on Thursday as investors spooked by the collapse of the main FTX sector withdrew more than $8 billion in capital, sending shares of the almost 39% before marketing.

The crypto-focused bank also said it would cut its workforce by 40%, or about 200 employees, as it tries to rein in costs amid a growing industry downturn.

The dire preliminary earnings report shows the scale of the impact on the digital asset industry from the fall of FTX, which filed for bankruptcy in November after failing to cover customer withdrawals, marking a reversal of fortunes amazing for what was one of the biggest crypto in the world. Trades.

Silvergate had earlier said it had no outstanding loans or investments in FTX, but its shares have lost 69% of their value since the stock market collapse, which triggered a wild sell-off in crypto.

“We are in a period of ‘shoot first, ask questions later’ for any bad news related to crypto and crypto-related businesses,” said Thomas Hayes, president and managing member of the company. Great Hill Capital investment.

“We expect this carnage to continue for some time as there is no way to value the underlying asset.”

Rising interest rates also crushed the industry last year, which lost more than $1 trillion in value.

Slowing its business expansion, La Jolla, Calif.-based Silvergate is also delaying the launch of a blockchain-based payment solution.

It would take a $196 million impairment charge in the fourth quarter on assets purchased from Diem Group, backed by Meta Platforms Inc, for the payment solutions business.

Total digital asset customer deposits fell to $3.8 billion at the end of December from September. The company sold $5.2 billion of debt securities with a loss of $718 million in the fourth quarter to maintain liquidity.

(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Subhranshu Sahu)

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