Shares of crypto-focused bank Silvergate Capital fell more than 40% after reporting a drop of more than $8 billion in customer deposits. The plunge in the stock price occurred just days after U.S. prosecutors reportedly seized accounts held at the bank of collapsed crypto exchange FTX. Silvergate CEO Alan Lane denied allegations that the bank was not in compliance with banking regulations.
Silvergate to cut 40% of its workforce
The value of shares of crypto-focused bank Silvergate Capital reportedly plunged more than 40% after the bank reported a sharp decline in digital currency-related assets in the fourth quarter (Q4). Overall, bank stocks have lost 69% of their value since the spectacular collapse of crypto exchange FTX in November 2022.
As a result of the more than $8 billion drop in crypto-related deposits, Silvergate said it will try to contain losses by cutting its workforce by 40%. As explained in a ReutersreportSilvergate’s preliminary earnings report appears to blame the collapse of crypto exchange FTX for the drop in customer deposits to $3.8 billion at the end of the quarter from $11.9 billion in September.
The confirmation of Silvergate’s drop in customer deposits comes a day after U.S. prosecutors told a bankruptcy court that they had seized bank accounts at crypto-focused and Farmington State Bank. According to reports, court records show that the bank accounts held approximately $143 million.
CEO denies allegations of violating bank secrecy laws
In addition to the $718 million loss incurred by being forced to sell $5.2 billion in debt securities, Silvergate will reportedly “record a $196 million impairment loss” on the blockchain-based payment solution it acquired from Diem.
During a conference call with analysts prior to the release of preliminary results, Silvergate CEO Alan Lane reportedly denied claims that the bank was not complying with the requirements of the Know Your Customer and Bank Secrecy Act.
“It is honestly very frustrating that there is misinformation out there. We follow the Bank Secrecy Act, the USA Patriot Act, and we have ongoing monitoring on every account we open,” Lane reportedly said.
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