On Thursday, Silvergate Capital announced a significant decrease in its workforce, leaving only a skeleton crew behind to oversee the liquidation of its crypto-friendly bank. The company will lay off 230 employees immediately, with additional job cuts later in the year. According to a filing with the Securities and Exchange Commission (SEC), the company will have just 80 employees remaining by week’s end.
Previously, Silvergate Bank had catered to numerous crypto-native clients such as Coinbase, Circle, Paxos, and Gemini, and even operated an instant settlement platform, SEN, which was heavily utilized by the bank’s institutional clientele. The bank, based in California, closed its doors back in March.
The remaining Silvergate personnel will handle tasks such as preserving the value of the company’s remaining assets, addressing any regulatory inquiries or investigations into both the bank and its parent firm. In the final fiscal quarter of 2022, Silvergate disclosed that $14 billion was withdrawn by its clients, following the collapse of Sam Bankman-Fried’s crypto empire, FTX. The bank survived this influx of withdrawals by thinning its portfolio of debt securities and receiving substantial loans from a government-sponsored institution, which attracted criticism from certain lawmakers.
Comparing the current layoffs to previous ones, Silvergate’s January job cuts were less severe, with 200 employees (a 40% reduction) being laid off to navigate a “challenging macro environment.” However, Silvergate shares plummeted in March when the company postponed a crucial SEC filing, raising doubts about its ability to continue as a going concern. This led to Silvergate becoming one of Wall Street’s most shorted stocks.
As of Thursday, Silvergate admits it is still unable to fulfill its filing obligations, and the company does not expect to produce audited financial reports in order to reduce costs. Furthermore, the bank has stated that it has sold all of its debt securities, currently holding more funds than necessary to repay depositors.
The closure of Silvergate was felt throughout the digital assets industry, since it was one of the primary crypto-friendly banks. However, this turmoil was largely eclipsed by the subsequent troubles faced by other banks such as Signature Bank and Silicon Valley Bank (SVB), which suffered failures just days after Silvergate.
By the end of last year, Silvergate possessed around $11 billion in total assets, a 29% decline from a year prior when the digital assets industry was booming. By comparison, Signature and SVB were much larger; they had $110 billion and $209 billion in total assets, respectively, by the end of last year.
Source: Decrypt
