Silvergate Capital Corporation, parent company of crypto-focused bank Silvergate Bank, has attributed its $1 billion loss in the fourth quarter of 2022 to the overall crypto ecosystem due to the trust crisis that permeates the entire crypto ecosystem.While Silvergate is taking steps to navigate the current environment, CEO Alan Lane said the company remains “focused on providing value-added services to our core institutional customers. He said.”
Confidence Crisis {16
Less than a month after Silvergate Bank reported a massive drop in customer deposits, Silvergate Capital Corporation, the parent company of crypto-focused financial institutionon the 17ththat the “transformational shift” seen in the fourth quarter (Q4) “created a crisis of confidence across the ecosystem.” This, in turn, sparked a shift to a “risk-off position across digital asset trading platforms,” the parent company said.
As a result of this change in environment, Silvergate said the group incurred a fourth-quarter net loss of $1 billion, or $33.16 per common share. The fourth quarter results are in contrast to the net income of $40.6 million, or $1.28 per diluted share, realized in the third quarter of 2022.
Due to the huge losses incurred in the fourth quarter, Silvergate Capital’s latest financial results show that for all of 2022, the group posted a loss of $948.7 million or $30.07 per common share.
As Bitcoin.com News reported in early January, Silvergate Bank shares took a heavy hit after it was revealed that crypto-focused bank customers withdrew more than $8 billion in deposits in the fourth quarter alone.
Silvergate is still committed to maintaining a “liquid balance sheet”
As a result, not only of this, but also of the bearish conditions that have prevailed in the crypto market since May 2022, Silvergate said it was forced to sell its debt securities at a loss of about $718 million. In addition, the company said it will record a “$196 million impairment loss” on the blockchain-based payment solution it acquired from Diem.
Commenting on the group’s latest financial results, Silvergate CEO Alan Lane said.
“While we are taking decisive action to navigate the current environment, our mission has not changed. We believe in the digital asset industry and remain focused on providing value-added services to our core institutional clients. To that end, we are committed to maintaining a liquid balance sheet and strong capital.”
Image Credits: Shutterstock, Pixabay, Wiki Commons