US bank Silvergate Risk Collapse As Crypto Withdrawals Hit $8 billion

Silvergate is a bank that is governed by the financial industry because it is listed on the New York Stock Exchange.

The bank recently reported that during the most recent quarter, its customers withdrew almost $8 billion from their accounts.

The bank’s customers withdrew about two-thirds of their deposits during the final three months of 2022.

In order to pay its expenses and maintain its viability, the bank liquidated assets worth $5.2 billion.

According to Bbc.com, The withdrawals followed the collapse of the FTX crypto exchange, which was once valued at $32bn before its bankruptcy filing in November.

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Former FTX boss Sam Bankman-Fried has pleaded not guilty to charges that he defrauded customers and investors. Prosecutors say as many as one million creditors may have lost their money.

Alan Lane, chief executive of Silvergate, said the bank was selling assets to cover the withdrawals by customers “in response to the rapid changes in the digital asset industry”.

The collapse of FTX caused fear throughout the ecosystem of digital assets, leading several businesses to cease withdrawals and, in other circumstances, declare themselves bankrupt.

Thursday morning saw a nearly 40% decline in Silvergate shares. The bank said that 200 employees, or 40% of its workforce, would be let go.

“In response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows,” said CEO Alan Lane on earnings call Thursday.

According to a court document filed on Thursday, Sam Bankman-Fried believes he should be the only owner of the nearly $450 million in Robinhood stock and that he needs the shares to support his legal defense.