Super important crypto bank records big loss

  • The firm claimed its net losses were slightly manageable compared to the other months of 2022.
  • In a statement earlier this month, Silvergate maintained strong confidence in the crypto industry despite the current downturn in the crypto market.

A popular crypto-friendly bank with ties to many crypto firms has announced massive financial losses in its Q4 2022 earnings report. Silvergate capital manages crypto assets for traders, institutions, and exchanges. The firm, which went public four years ago, also enables them to swap their crypto assets for fiat.

According to an official statement, the bank’s losses for the last three months of 2022 amounted to $1 billion.

A poor Q4 result

Part of the statement read, “while net income for Q3 2022 was $40.6 million (about $1.28 per diluted share), we recorded $1.0 billion net loss (about $33.16 loss per common share) for Q4 2022.” Nevertheless, the firm claimed its net losses were slightly manageable compared to the other months of 2022. Silvergate explained that common shareholders’ net loss for last year’s financial year end was $948.7 million.

By comparison, common shareholders’ net income for the 2021 financial year was $75.5 million. Even though the bank recorded huge losses in the last three months of 2022, it still experienced a surge in transactions. The Silvergate exchange network recorded a 4 percent rise in the transaction volume between the third and fourth quarters of 2022.

The bank processed $117.1 billion in transfers in Q4 2022, while it processed $112.6 billion in transactions in Q3 2022. However, the Q4 transaction volume represents a 47 percent decrease when compared to Q4 2021 transaction volume. Silvergate processed $219.2 billion in transfers in Q4 2021 alone.

In his comments regarding the latest earnings report, Alan Lane (Silvergate CEO) remarked that there had been no changes to the company’s mission, even though it will continue to take decisions to avoid being wiped off by the current crypto winter. Lane added that the company’s belief in the crypto industry hasn’t waned, and it will continue to focus on offering the best crypto services to its individual and institutional clients.

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Consequently, we will continue to ensure that we have a strong capital position and a highly liquid balance sheet,

The Silvergate CEO further added. In a statement earlier this month, Silvergate maintained strong confidence in the crypto industry despite the current downturn in the crypto market.

That statement aligns with its CEO’s recent comments, who added that the company would ensure that its decisions to survive the crypto winter don’t make it deviate from its core mission in the industry.

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Providing clarifications

Following the insolvency and bankruptcy filings of the crypto lender, BlockFi, and leading crypto exchange FTX, there were reports that Silvergate had huge exposure to these firms. However, the bank released an official statement to clarify these issues. It stated that its exposure to BlockFi was worth $20 million in customer deposits.

The statement also explained that Silvergate has no investments in FTX or any outstanding credits with the exchange. It further clarified that it isn’t true that the defunct crypto exchange was a custodian of its BTC-collateralized leverage loans. Despite the clarifications, Silvergate’s share price still dropped by 45 percent.

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