Silvergate Capital Corp (NYSE: SI) shares dropped sharply on Thursday, with intraday declines as of midday more than 47% to see the crypto-focused bank’s stock trade around $11.52.
Silvergate shares fall as investors withdraw $8 billion in deposits
Losses for crypto-friendly bank’s shares followed the company’s fourth-quarter report before markets opened. Per the update, Silvergate customers, most probably concerned by the shocking collapse of crypto exchange FTX, moved to make massive withdrawals. In total, investor deposits fell from $11.9 billion to $3.8 billion. Crypto-related deposits fell more than $8.1 billlion during the quarter.
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The company also recorded a huge decline in average customer deposits across board, which dropped by $4.7 billion to $7.3 billion.
Silvergate to cut workforce by 40%
Shares were also down as Silvergate management announced plans to cut its workforce.
According to the bank’s announcement, the move to lay off 40% of the workforce – about 200 employees – are part of the measures being taken to reduce costs as the broader crypto industry continues to battle with the effects of the brutal 2022 bear market.
According to Silvergate CEO Alan Lane, the measures taken have been in response to the crypto market’s outlook and events as the year drew to a close. He noted in a statement:
“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, and we currently maintain a cash position in excess of our digital asset related deposits.”
The reaction in the market saw the company’s shares plummet more than 47%, with prices moving from around $22 to the aforementioned lows of $11.52.
Silvergate shares have declined more than 69% since FTX’s implosion. Indeed, with broader crypto sentiment down, the crypto-friendly bank’s stock has dipped even further after US prosecutors announced they had seized FTX-related bank accounts at Silvergate.