Silvergate Capital Corporation, the owner of cryptocurrency-focused Silvergate Bank, recorded a $1 billion loss in the fourth quarter of 2022, blaming a general trust crisis. CEO Alan Lane has implemented steps to assist the firm in surviving the present situation, with Silvergate focused on providing its main institutional customers with value-added services.
Confidence Crisis
On January 17th, Silvergate Capital Corporation, the parent company of Silvergate Bank, disclosed a “transformational shift” noticed in the fourth quarter of 2022, which created a crisis of trust inside the ecosystem. This, in turn, led to a “risk position on all digital asset trading platforms,” the parent company said.
This shift in the environment caused Silvergate to record a net loss of $1billion in the fourth quarter, which is $33.16 per share. This is in contrast to the net profit of $40.6million or $1.28/diluted share that was achieved in the third quarter of 2022.
Due to the significant losses sustained in the fourth quarter, Silvergate Capital’s financial results indicated that it suffered a loss of $948.7million or $30.07 per common stock in 2022. This, combined with the bearish market conditions that followed, caused a decrease in the crypto market. In May 2022, Silvergate announced that it had sold debt securities at a loss of more than $718 million, and additionally stated it would “take a $196 million impairment charge” for the purchase of Diem, a blockchain-based payment system.
Commenting on the latest financial results for the group, Silvergate CEO Alan Lane said:
“We are making decisive moves to get through this climate, but our mission is not changing. We believe in the digital assets sector and are focused on providing value-added service to major institutional clients. To that end, we will continue to maintain a liquid balance sheet and strong capital position.
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