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Silvergate Bank, which currently faces a class-action lawsuit over its FTX and Alameda Research dealings, has announced a $1 billion net loss attributable to common shareholders in the fourth quarter of 2022.
In a report published by the United States Securities and Exchange Commission (SEC), the digital asset bank highlighted that it saw significant outflows of deposits in the last quarter of 2022 and made actions to maintain cash liquidity, including wholesale funding and selling debt securities.
The company has also demonstrated a 'transformational change' in the area of digital assets. He noted that a crisis in trust across the ecosystem has led clients to take a "risk" position on crypto trading platforms.
According to the report, average digital deposits in Q4 2022 amounted to $7.3 billion. This is a significant decrease from Q3 2022, when deposits were approximately $12 billion.
Despite the losses, the corporation pointed out that it is taking steps to prepare for a sustained period of lower deposits. According to the announcement, silvergate manages its spending base and assesses its product portfolio and client relationships.
In the midst of difficulties, Silvergate CEO Alan Lane stressed that the company still believes in the digital asset industry and remains "determined to keep a very liquid balance sheet with a solid capital position."
Related: Silvergate hit with another class-action suit, this time for securities law violations
On Jan. 5, the company laid off around 200 employees, which accounted for roughly 40% of its workforce, as part of its efforts to stay afloat. In addition, the company has also put aside plans to launch a digital currency project, writing off 200 million dollars used to buy the technology developed by facebook.
Reacting to the situation, rating firm Moody’s Investors Service downgraded its rating of Silvergate Bank. The notation has been changed to baa2, who was "middle rank below," at ba1, Which is considered "garbage." Besides that, moody's also pointed to negative prospects for Silvergate Capital and its bank.
