Major Bitcoin Banking Partner 'Silvergate Bank' Lost Over $700M Liquidating Debt to Cover $8.1 Billion in Withdrawals Amid Bank Run
The collapse of FTX sparked a run on Silvergate Capital Corp. forcing the bank to sell assets at a steep loss to cover some $8.1 billion in withdrawals.
- The $718 million Silvergate lost selling debt far exceeds the bank’s total profits since at least 2013.
- The bank has laid off 40% of its staff, or about 200 employees.
- It shelved a plan to launch its own digital currency, writing off $196 million it spent buying the technology that Facebook had built in its failed attempt to start a crypto-based payments network.
- Silvergate caters to bitcoin companies, taking their deposits and operating a network that links investors to exchanges.
- FTX and other companies controlled by its founder, Sam Bankman-Fried, accounted for about $1 billion of the bank’s deposits.
- Silvergate was able to survive such a steep decline in deposits because it isn’t structured like most banks. It sold off much of its traditional banking operations and branches to focus on providing bank accounts to crypto exchanges and investors. Crypto-related deposits account for some 90% of the bank’s total, and it keeps almost all of its deposits in cash or easy-to-sell securities.