The high-profile collapse of cryptocurrency exchange FTX is said to have triggered a mass exodus from Silvergate, a crypto-friendly bank.
According to a new Wall Street Journal report, the disintegration of the FTX ecosystem resulted in over $8 billion in withdrawals from Silvergate, a bank known for its embrace of digital assets.
In response to the outflow of funds, the bank reduced its workforce by 40%, abandoned plans to create its own digital asset, and liquidated $718 million in balance-sheet debt holdings.
The stock price of the company has also dropped by more than 70% in the last three months.
Silvergate, which went public in 2019, is known for serving crypto firms, managing their virtual assets, and running a platform that connects traders to crypto exchanges.
According to the report, at the time of FTX’s demise, Silvergate held approximately $1 billion in assets belonging to FTX and other firms affiliated with it.
According to the report, Silvergate sold off the majority of its traditional banking operations in order to focus on the crypto industry. Because Silvergate is not structured like other banks, it was able to withstand the massive outflow of funds.
Despite market volatility, Silvergate told The Wall Street Journal that it still believes in cryptocurrencies.
“Although Silvergate is taking decisive action to navigate the current environment, its mission remains unchanged. Silvergate is optimistic about the digital asset industry.”
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