FTX’s collapse has led to a bank run for Silvergate which resulted in the company selling off its assets at a loss and reducing 40% of its staff to cover $8.1 billion worth of customer withdrawals, as reported by Cointelegraph.
According to Cointelegraph, insights provided by The Wall Street Journal stated that the bank liquidated debt present in its balance sheet to match withdrawals, losing $718 million in the process. Reportedly, crypto-oriented deposits of the firm fell by 68% in Q4 of last year. It is believed that Silvergate fired around 200 employees, which was 40% of its total personnel. Additionally, the bank also dismissed a plan to unveil its own digital currency project, writing off approximately $200 million that it paid Facebook to purchase the technology for the Diem project.
On the basis of information by Cointelegraph, the bank is expected to remain optimistic towards crypto and claims to have necessary funds to tackle a transition phase. The bank also highlighted that it’s “taking decisive action” to deal with the current market situation. On December 6, 2022, three US senators sent a letter to Silvergate to investigate the bank’s involvement in customer losses.
Moreover, Cointelegraph noted that on December 16, 2022, Silvergate was at the receiving end of a class-action lawsuit on account of its alleged roles in the loss of FTX customer funds.
(With insights from Cointelegraph)