Crypto Bank Silvergate Reports Q4 Net Loss of $1 Billion Amid Crisis of Industry Confidence

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The latest financial data from crypto bank Silvergates indicates that the company has been hit hard by the ongoing crypto crisis.

The company’s fourth quarter report indicated a net loss of $1 billion attributable to shareholders, citing a transformational shift in the crypto industry that has led to a crisis of confidence in the ecosystem.

Despite the sluggish results, Silvergate CEO Alan Lane insisted the company’s mission had not changed, adding that the company remained focused on providing value-added services for [its] core institutional clients.

The California-based bank specializes in cryptocurrency transactions, having also worked with the now bankrupt crypto exchange FTX and its sister trading firm Alameda Research. Silvergate was the subject of a class action lawsuit last December over these transactions.

Earlier in January, Silvergate also announced that it would cut its workforce by around 40%, or 200 people, to stem the recession and allow the company to navigate what it calls a more macro environment. difficult. »

Not all crypto banks are built equal

Elsewhere, crypto-friendly Signature Bank (SBNY) defied all estimates and posted net profits of nearly $301 million in Q4 2022 despite a $14 billion drop in deposits last year so that the company was gradually reducing its exposure to crypto, according to a press release published today.

Initial projections for the quarter from trade analysts FactSet called for Signature Bank to post $299 million in profit after bringing in $272 million in the previous quarter, so today’s report shows strong growth, despite a $14 billion drop in deposits in the last fiscal quarter of 2022.

However, the bank fell short of FactSets’ earnings-per-share forecast, which said the institution would earn $4.82 per share, down from $4.34. According to Signature Bank, the actual figure turned out to be $4.65.

The significant decline in deposits brought Signature Banks’ total deposit value in the fourth quarter to $88.6 billion, with crypto deposits down $7.35 billion in the quarter and down nearly 12.39 billion dollars for the year.

In the press release, CEO Joseph DePaulo attributed the decline in deposits to a challenging cryptocurrency environment and our expected reduction in Digital Asset Banking deposits, which fell by $12.39 billion.

He said: “The challenging rate environment [a reference to the Feds decision to hike interest rates seven times last year to counter inflation]as well as challenges in the digital asset space, led to a drop in deposits, which we overcame without difficulty, given our strong liquidity position.

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