Silvergate Capital tanks over 40% after crypto bank reveals massive Q4 pullback

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Sections of Silvergate Capital it sank 47% on Thursday after the crypto-focused bank released preliminary fourth-quarter results that showed a sharp withdrawal from customers.

Total deposits from digital asset buyers declined to $3.8 billion from $11.9 billion at the end of the third quarter, a decline of about 68%. The withdrawals came as the crypto exchange FTX, a Silvergate customer, fell into scandal, raising questions about the sustainability of the digital asset industry. Silvergate said there was a “crisis of confidence across the ecosystem.”

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At the end of December, $150 million of the bank’s deposits were held by customers who had filed for bankruptcy protection, Silvergate said.

To raise money during this period, Silvergate sold $5.2 billion of debt securities, creating a loss on sales of $718 million. It reported $4.6 billion in total cash and cash equivalents held at the end of December.

“In response to the rapid changes in the digital asset industry in the fourth quarter, we took similar steps to ensure we were maintaining cash liquidity to satisfy investment flows, and we are -currently holds a higher cash position than our digital assets. related investments,” CEO Alan Lane said in a statement.

Silvergate also announced that it is laying off 200 employees, or about 40% of its workforce, and exited its mortgage warehouse lending business.

Thursday’s stock move canceled a big rally for Silvergate on Wednesday, when shares gained 27%.

Silvergate, which went public in 2019, saw its stock rise as high as $222 per share in November 2021, the same month as the highest price in Bitcoin. Silvergate shares ended 2022 at $17.40, more than 90% off their all-time high.

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