BlocksInform
The FTX debacle triggered a Silver GATE banking transaction, The company is selling its assets at a loss and reducing its workforce by 40 per cent to cover $8.1 billion in client withdrawals.
According to a report published by the Wall Street Journal, the bank liquidated debt that it was holding on its balance sheet to keep up with withdrawals, losing $718 million in the process. The loss would have exceeded the earnings of the company since 2013. Moreover, deposits linked to cryptography in the company fell by 68% in the fourth quarter of last year.
As a result, Silvergate has laid off approximately 200 employees, representing 40 per cent of its total staff. Apart from this, the bank also canceled a plan to launch its own digital currency project, writing off almost $200 million that it paid Facebook to buy the technology it built for the Diem project.
Nevertheless, the bank remains positive in its commitment to cryptography and asserts that it has sufficient funds to manage a transformation phase. The bank stressed that it is "taking decisive measures" to cope with the current market situation.
The bank was reviewed by US legislators due to its links with ftx and alameda research. On Dec. 6, three US senators wrote a letter to Silvergate to probe the bank's involvement in customer losses as the FTX exchange collapsed. The company's role in the transfer of ftx client funds to alameda appears to be a failure on its part in the surveillance and suspicious activity reporting according to the letter.
Related: Companies and investors may need to return billions in funds paid by FTX
On Dec. 16, a class-action lawsuit was filed against Silvergate, in an attempt to hold it accountable for its alleged roles in the loss of FTX customer funds. The prosecution claimed that the bank is responsible for its involvement in "continuing the investment fraud of ftx."
