Silvergate’s bank run has triggered a FTX crisis, causing it to sell off assets and reduce staff by 40% in order to pay $8.1 million in customer withdrawals.
According to Wall Street Journal’s report, the bank has a “very good” reputation. liquidated The firm had $718million in debt that it held on its balance sheets to cover withdrawals. The loss reportedly surpasses the firm’s profits since 2013. The firm’s crypto-related deposits also dropped 68% in last quarter.
Silvergate had to fire around 200 people, representing 40% of its total staff. The bank also cancelled plans to launch its own digital currency program and wrote off nearly $200 million it paid Facebook for the technology it developed for the Diem project.
The bank is still positive about its commitment to crypto, and claims that it has enough funds to support a phase of transformation. The bank stressed that it was taking “decisive action” to manage the current market situation.
Because of its ties and involvement with FTX/Alameda Research, the US legislature has been monitoring the bank. Three US senators wrote a December 6th letter to Silvergate inquiring about the bank’s role in customer losses following the collapse of the FTX Exchange. According to the letter, the bank’s involvement in transferring FTX customer money to Alameda appears to have been a failure in its monitoring and reporting of suspicious activity.
Related: Investors and companies may have to return billions of dollars in FTX funds.
Silvergate was sued in a class action lawsuit on Dec. 16th, seeking to hold it responsible for its alleged involvement in the loss of FTX customer money. The bank was accused of being responsible for “furthering FTX’s investment scam.”