Crypto Bank Silvergate In Trouble | CoinSnacks

Crypto Bank Silvergate In Trouble

What seemed to be one of crypto’s greatest success stories is now in dire straits.

Silvergate (SI), the bank that embraced crypto and, as a result, grew from a small regional bank into a public behemoth, is now down badly following the collapse of FTX.

Layoffs and Asset Sales

The loss in consumer confidence following the FTX collapse has hit centralized entities the hardest, and Silvergate is no exception.

It was just two quarters ago that Silvergate customer deposits were at $12 billion. They now stand at $3.8 billion. To cover the $8 billion in withdrawals, Silvergate had to sell assets at a $718 million loss.

Not what you want to see from a bank.

But it gets worse.

  • Silvergate is writing off its $200 million investment in Diem. So long, Silvergate stablecoin
  • 40% of the staff is getting laid off
  • The company is getting sued as part of a class action lawsuit over its dealings with FTX
  • Silvergate stock (SI) is down 44% in the last month

It all adds up to an ugly picture for the bank.

Looking Ahead

At this point, it looks like Silvergate is closer to the grave than the promised land. The stablecoin is dead, they are barely scraping together the money to facilitate withdrawals, and almost half the company has been laid off.

They can’t take many more hits if they wish to survive the rest of the bear market.

If Silvergate does croak, it would be another huge blow to crypto’s already battered reputation. Sure, the other crypto-focused banks, Provident Bank and Signature Bank, seem to be doing somewhat alright right now, but:

  • Crypto failures always get more publicity than crypto successes
  • And who really knows if they are actually ok at this point?

Should Silvergate, a regulated and public company, fail, it will be that much harder to attract institutional money.

Silvergate’s survived bear markets in the past. Let’s hope they can do it again.

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