Silvergate, a crypto-focused bank, is set to reduce 40% of its staff in response to the crisis in digital asset sectors sparked by Sam Bankman-Fried’s collapse.
The sector’s meltdown, triggered in November by the bankruptcy of crypto exchange FTX, led to an $8.1bn (£6.8bn), run on Silvergate deposits in the final quarter of last year.
According to a statement, the bank in California had to sell assets for $718m (£610m) today.
Crypto-focused bank @silvergatebank is to cut 40% of its staff as the crisis in the digital asset sector sparked by the collapse of Sam Bankman-Fried's #FTX empire rumbles on. Shares in the company plunged 41% to $13 in pre-market trading in New York. https://t.co/m7XZHvXCYW
— Share_Talk ™ (@Share_Talk) January 5, 2023
The company’s shares plunged 41pc and fell to $13 during pre-market trading in New York.
This comes as regulators intensify their scrutiny of digital assets sectors in the wake of the collapse of Sam Bankman Fried’s FTX.
According to bankruptcy court filings, the US Securities and Exchange Commission has rejected Binance US’s plan for crypto exchange Binance US to purchase Voyager Digital, a bankrupt crypto lender. The deal is estimated at $1 billion.
As confidence plunges in the crypto sector, Silvergate has decided to lay off around 200 employees.
In a statement, the crypto-focused bank stated:
Digital-assets industry has seen a significant transformation, with high-profile bankruptcies and over-leverage leading to significant financial losses.
These dynamic have caused a crisis in confidence throughout the ecosystem, leading many industry players to shift to a risk off’ position across digital-asset trading platform.
According to the company, it believes in digital assets and is committed to “highly liquid balance sheets with strong capital positions.”
Silvergate’s total digital-asset deposits declined to $3.8bn by the end of the fourth quarter.
