• By Finsok
  • 20 Jan, 2023

  • 7 min read

Silvergate Capital posted a $1 billion loss in the fourth quarter of 2022

Silvergate Capital posted a $1 billion loss in the fourth quarter of 2022

Silvergate Capital Corporation, the parent firm of the crypto-focused Silvergate Bank, attributed the $1 billion loss it suffered in the fourth quarter of 2022 to a crisis of confidence that permeates the entire crypto ecosystem. While Silvergate has taken steps to help it navigate the current environment, according to CEO Alan Lane, the firm remains “focused on providing value-added services for [its] main institutional clients”.

Crisis of confidence

Less than a month after Silvergate Bank reported a massive drop in client deposits, the parent company of the crypto-focused financial institution, Silvergate Capital Corporation, said Jan. 17 that the “transformational shift” seen in the fourth quarter (Q4) helped ” create a crisis of confidence throughout the ecosystem.” This, in turn, prompted a move to a “risk-free position on digital asset trading platforms,” the parent firm said.

As a consequence of this changed environment, Silvergate said the group posted a Q4 net loss of $1.0 billion, or a loss of $33.16 per share of common stock. Fourth quarter results differ from net income of $40.6 million, or $1.28 per diluted share, realized in the third quarter of 2022.

Due to massive fourth-quarter losses, Silvergate Capital’s latest financial results show the group posted a total loss of $948.7 million, or $30.07 per share of common stock, for all of 2022.

As Bitcoin.com News reported in early January, Silvergate Bank shares fell heavily after it was revealed that more than $8 billion worth of deposits were withdrawn by customers of the crypto-focused bank in the fourth quarter alone.

Silvergate remains committed to maintaining a “highly liquid balance sheet”

Consequently, because of this, and also because of the bearish conditions that have prevailed in the cryptocurrency market since May 2022, Silvergate said it was forced to sell debt securities at a loss of about $718 million. In addition, the bank said it would “assume a $196 million impairment charge” on the blockchain-based payment solution it acquired from Diem.

Commenting on the group’s latest financial results, Silvergate CEO Alan Lane said:

“While we are taking decisive action to navigate the current environment, our mission has not changed. We believe in the digital asset industry and remain focused on providing value-added services to our core institutional clients. To this end, we aim to maintain a highly liquid balance sheet with strong capital.”

What do you think of this story? Let us know what you think in the comments section below.

Terence Zimwara

Terence Zimwara is a Zimbabwean journalist, author and writer. He has written extensively on the economic woes of some African countries and how digital currencies can provide Africans with a path to salvation.

Image credits: Shutterstock, Pixabay, Wiki Commons

Denial of responsibilityA: This article is for informational purposes only. This is not a direct offer or solicitation 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 directly or indirectly liable for any damage or loss caused or alleged to be caused by the use of or reliance on any content, goods or services mentioned in this article.

Source link

© 2023 by Finsok