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A financial performance that is less than par, bankruptcy deposits and closures of enterprises, exposure to FTX plummeting, job cuts, and the slowdown in some investments or projects were some of the challenges that crypto firms faced in 2022.
Silvergate Capital, a financial solutions provider in the digital asset industry, released its financial performance for the year ended December 31, 2022 with a net loss. Silvergate also confirmed his exposure to the genesis. The corporation has taken steps to manage its operating expenses and has announced that dividend payments on its preferred shares will be suspended.
In a press release dated January 17, 2023, Silvergate announced its financial highlights of the fourth quarter of 2022 and the year 2022. Silvergate recorded net income of $40.6M in the fourth quarter of 2022 and a net loss of approximately $1B. The net profit for the year ended December 31, 2022 was $75.5 million U.S., with a net loss of $948 million U.S.
In a January 20, 2023 news release, Silvergate described its exposure to Genesis as limited, with a maximum of $2.5 million in client deposits. The Genesis crypto loan unit went under. Silvergate indicated that it had no outstanding loans and no Genesis placements.
In November 2022, Silvergate announced that it had a limited show and no blockfi investments. BlockFi, a crypto platform, went bankrupt at the end of November 2022 by invoking substantial exposure to FTX and its cryptocurrency trading sister company, Alameda Research.
Silvergate has undertaken a number of measures aimed at sustaining its business operations. This includes a reduction of approximately 200 employees or approximately 40 per cent of its workforce and the sale of a portion of its assets, albeit at a loss, to manage liquidity. Silvergate also announced the departure of some of its secondary customers and the elimination of a portion of its product portfolio.
Silvergate also announced that it would discontinue certain projects and reduce the cost of the project by nearly $200 million.
In another press release dated January 27, 2023, Silvergate announced that dividend payments on its Series Preferred Shares had been suspended. Silvergate claims the reason is to maintain liquidity during the current period of volatility in the crypto industry. Future dividend payments will be reviewed by the Silvergate Board based on market conditions.
A number of other crypto firms are taking similar or related actions to overcome the crypto storm and ensure their survival into 2023 and beyond. Whether these measures will be effective is just a matter of time.
