The price of the crypto-focused bank Silvergate Capital’s shares fell by over 40% after it reported a more than $8 billion drop in customer deposits. The share price plunge came just days after U.S. prosecutors reportedly seized collapsed crypto exchange FTX’s accounts held at the bank. Alan Lane, the CEO of Silvergate, denied allegations that the bank does not adhere to banking rules.
Silvergate to Cut Workforce by 40%
The value of the shares of the crypto-focused bank Silvergate Capital reportedly plunged by more than 40% after it reported a sharp drop in its fourth-quarter (Q4) digital currency-related assets. Overall, the bank’s shares have seen their value drop by 69% since the crypto exchange FTX’s spectacular collapse in November 2022.
As a consequence of the more than $8 billion drop in crypto-related deposits, Silvergate said it would attempt to rein on losses by cutting its workforce by 40%. As explained by a Reuters report, Silvergate’s preliminary earnings report appeared to blame crypto exchange FTX’s collapse for the drop in customer deposits from $11.9 billion in September to $3.8 billion by the end of Q4.
Silvergate’s confirmation of the drop in customer deposits came a day after a United States attorney told a bankruptcy court that U.S. prosecutors had seized bank accounts at the crypto-focused bank and Farmington State Bank. According to the report, court records show that the bank accounts held around $143 million.
CEO Denies Bank Secrecy Act Violation Allegations
Besides the $718 million loss incurred after it was forced to sell debt securities at $5.2 billion, Silvergate reportedly said it would “take an impairment charge of $196 million” on the blockchain-based payment solution it acquired from Diem.
In his conference call with analysts before the release of the preliminary earnings report, Silvergate’s CEO Alan Lane reportedly rejected assertions the bank does not adhere to know your customer and Bank Secrecy Act requirements.
“The misinformation out there is candidly very frustrating. We follow the Bank Secrecy Act, the USA Patriot Act for every account that we open, and we conduct ongoing monitoring,” Lane reportedly said.
Meanwhile, at the time of writing, Silvergate’s after-hours (07:59 PM EST) share price was $11.93.
What are your thoughts on this story? Let us know what you think in the comments section below.
Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.