Crypto bank Silvergate has seen clients pull $8.1 billion in deposits during a “crisis of confidence” last year, forcing it to sell assets. The withdrawals came after the collapse of FTX, a Silvergate customer.
The California-based bank recently disclosed that deposits from digital asset customers shrank from $11.9 billion at the end of September to $3.8 billion on December 31. The disclosure saw its shares plummet nearly 43%.
Silvergate is a Federal Reserve member bank and is listed on the New York Stock Exchange, and has recently come under heavy pressure as digital asset prices keep tumbling and several large industry players file for bankruptcy.
Alan Lane, Silvergate’s chief executive officer, said the cryptocurrency industry faced a “crisis of confidence and in that kind of situation many of the institutional players have been pulling money off of these trading platforms.”
The bank said that in order to meet customer withdrawals and raise cash, it rushed to sell $5.2 billion worth of debt securities at a loss of $718 million. Lane said the crypto space experienced a “significant overleveraging and began to unwind” last year.
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