Silvergate Capital was forced to offload assets at a substantial loss to cover $8.1 billion in withdrawals after its crypto deposits plunged 68% in Q4 2022, according to the WSJ. The reports sent Silvergate’s shares tumbling 41% in premarket trading.

Silvergate Loses $718M as Crypto Deposits Plunge 68% in Q4

Silvergate Capital Corp.’s shares are down 41% in premarket trading Thursday the bank sold assets at a sharp loss to cover roughly $8.1 billion in withdrawals, the WSJ reported. The stock trades at $21.95 per share ahead of today’s session.

According to the WSJ, Silvergate’s crypto deposits plummeted 68% in Q4, the bank said in the preliminary earnings release. The bank liquidated debt it was holding on its balance sheet to address the withdrawals, resulting in a $718 million loss, significantly higher than its total profits since 2013.

The move comes in the wake of the FTX collapse in November, which has had a powerful contagion impact on the industry. The fallen crypto exchange accounted for around $1 billion of Silvergate’s deposits. The bank serves numerous crypto businesses, taking their deposits and managing a network that connects investors with crypto bourses.

Silvergate weathered the deposits slump because it is structured differently than other banks. The California-based bank offloaded most of its traditional banking operations to focus on serving crypto exchanges and investors. Crypto-related deposits represented around 90% of Silvergate’s total deposits, most of which were in cash or other liquid securities.

Silvergate Cuts 40% of its Workforce

According to its preliminary Q4 2022 financial results, Silvergate reduced as much as 40% of its workforce, amounting to around 200 employees. The bank also scrapped plans to roll out its digital currency and wrote off the $196 million it spent to acquire Facebook’s blockchain payment network, Diem.

The bank said it had $4.6 billion in cash on hand at the end of Q4 and $3.8 billion in remaining deposits. In addition, Silvergate held a further $5.6 billion in debt securities such as US Treasuries.

“While Silvergate is taking decisive action to navigate the current environment, its mission has not changed. Silvergate believes in the digital asset industry.”

– Silvergate Capital said in a statement.

The earnings results come just a day after a federal judge ordered the seizure of over $90 million held by FTX Digital Markets in its Silvergate accounts, according to the court filing. It was also revealed that Bahaman liquidators that filed for a separate bankruptcy, ordered the bank to transfer the FTX-linked money to “ensure the safety” of assets.

This article originally appeared on The Tokenist

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