Silvergate Capital, the parent company of the now-collapsed Silvergate Bank, recently announced that it would be delisting from the New York Stock Exchange (NYSE) and letting go of 230 staff members. This decision follows the decline of the company’s share price, which has dropped nearly 93% since the beginning of 2023.
After the staff reduction, approximately 80 officers and employees will remain to manage the liquidation process for Silvergate Bank. The company also noted that further staff cuts are expected to happen on June 30, Aug. 30, and Nov. 30. It’s estimated that the costs associated with these reductions will amount to about $13.6 million, which covers severance, retention and bonus pays, along with job placement programs.
Additionally, Silvergate Capital revealed in another filing to the Securities and Exchange Commission (SEC) that it will no longer be providing legally required financial updates for the 2022 fiscal year and the first quarter of 2023. Moreover, the company stated that it doesn’t expect to be able to file similar reports in the future.
This decision comes as Silvergate faces various regulatory inquiries and investigations. The company referred to the continuous developments surrounding these pending issues, as well as legal liabilities and the bank’s liquidation process, as challenging. Therefore, Silvergate determined that minimizing costs and expenses would be in the best interests of their stakeholders in order to preserve value. Cutting staff members deemed “critical” in preparing these financial filings is one such action.
The voluntary liquidation of Silvergate Bank was first announced on March 8 after multiple cryptocurrency firms, including Gemini, Coinbase, Galaxy Digital, and BitStamp, severed ties with the bank. This decision followed a Justice Department investigation into the bank’s alleged connections to the collapse of FTX.
The situation with Silvergate Capital and Silvergate Bank emphasizes the importance of regulations and the scrutiny that financial institutions, particularly those connected to the cryptocurrency market, can face. While some might argue that the bank’s management should have employed better risk management strategies to avoid such eventualities, others contend that the regulatory environment and the uncertainty surrounding digital assets contributed to the issues faced by the bank. As the story unfolds, it raises questions about the future of financial institutions’ relationships with cryptocurrency markets and the challenges that may arise in navigating an increasingly complex regulatory landscape.
Source: Cointelegraph
