Shares of Silvergate rose higher on Tuesday after the crypto bank told its investors that it would take action to deal with the collapse of the FTX platform, despite posting a billion-dollar loss in the final quarter of 2022 .
Silvergate published its Tuesday results of the fourth quarter, showing a net loss of $1 billion for the final quarter of 2022, compared to a net profit of $40.6 million for the third quarter and a net profit of $18 million for the same period a year ago seen.
The company records a loss of $949 million in 2022, compared to a net profit of $75.5 million in 2021. The company’s massive losses stem mainly from asset sales with a sharp decline in November last year, but also the bankruptcy of FTX and then withdrawals.
As reported in the results, Silvergate suffered from a bank after the collapse of FTX, which forced the company to sell many assets at a deeply discounted price in order to secure withdrawals from its users in the amount of 8.1 billion dollars.
The cryptobank sold about $5.2 billion in debt securities it held to cover the withdrawals. As a result, it suffered a loss of $718 million, which would exceed the bank’s total profits since 2013.
Despite the lackluster report, Silvergate shares rose on the news as the bank outlined the steps it intends to take to overcome the situation and crisis caused by the FTX collapse.
Silvergate said it will spin off part of its digital asset product portfolio and reassess its list of potential customers. The bank will also stop offering its cryptocurrency custody service, chief executive Alan Lane said. He adds to this:
“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 our mission to provide quality services to our key institutional clients. »
The bank’s shares rose 4.9% on the New York Stock Exchange to a price of $13.85 in early trading on Tuesday. However, he points out that at the end of the day, the company lost some of its gains and closed 0.98% higher.
The bank also laid off 40% of its staff at the end of 2022, i.e. about 200 employees. Additionally, Silvergate has abandoned its latest project to launch its own digital currency after spending more than $196 million to buy the technology that Facebook used in its failed attempt to create a crypto payment network.
Silvergate describes itself as one of the leading banks for companies in the fintech sector and crypto ecosystem. However, his main sources of income were particularly related to the FTX exchange platform and the Alameda investment fund.
It should be noted that the cryptobank is under investigation for possible facilitation of illegal transactions. On December 6, three US senators wrote a letter to Silvergate to investigate the bank’s involvement in customer losses during the FTX stock market collapse.