Silvergate Capital Corporation, the parent company of cryptocurrency-focused Silvergate Bank, has attributed the $1 billion loss it incurred in the fourth quarter of 2022 to the crisis of confidence pervading the entire cryptocurrency ecosystem. While Silvergate has taken steps to help it navigate the current environment, according to CEO Alan Lane, the company remains “focused on providing value-added services for (its) major institutional clients.”
trust crisis
Less than a month after Silvergate Bank reported a massive drop in customer deposits, the parent company of the crypto-focused financial institution, Silvergate Capital Corporation, saying on January 17 that a “transformational shift” seen in the fourth quarter (Q4) had helped “create an ecosystem-wide crisis of confidence.” This, in turn, prompted the shift to a “risk position on all 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 a loss of $33.16 per common share. The fourth-quarter performance contrasts with net income of $40.6 million, or $1.28 per diluted share, achieved in the third quarter of 2022.
Due to massive losses suffered in the fourth quarter, Silvergate Capital’s latest financial results show that in all of 2022, the group incurred a total loss of $948.7 million or a loss of $30.07 per common share.
As Bitcoin.com News reported in early January, Silvergate Bank shares took a hit after it was revealed that customers of the crypto-focused bank had withdrawn more than $8 billion in deposits in the fourth quarter alone.
Silvergate remains committed to maintaining a ‘highly liquid balance sheet’
Consequently, due to this, as well as the bearish conditions that have prevailed in the crypto market since May 2022, Silvergate said that it was forced to sell debt securities at a loss of around $718 million. In addition, the bank said it would “take a $196 million impairment charge” 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 steps 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 for our major institutional clients. To that end, we are committed to maintaining a highly liquid balance sheet with a strong capital position.”
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