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To reset its business after a large deposit run last quarter, La Jolla-based cryptocurrency bank Silvergate Capital has cut 181 jobs at its local headquarters.
The bank filed a Workers Adjustment and Retraining Notice Act document with the California Department of Employment detailing the workforce reduction. This equates to his 40% of all employees.
Layoffs span across the organization, including underwriting, customer service, business development, loan management, information technology and human resources. About two dozen of the jobs eliminated were senior positions. The chief credit officer and chief anti-money laundering and sanctions officer have been fired, according to WARN filings.
Silvergate CEO Alan Lane said in a conference call with analysts last week that “Throughout 2022, we will continue to accelerate our efforts to accommodate our growing business and effectively serve our customers. Increased headcount: “To account for the economic realities facing our business and industry today, it became clear that we needed to keep costs under control.”
Silvergate, a state chartered bank, specializes in providing financial infrastructure for the cryptocurrency trading industry. The past few months have been devastated by several crypto industry failures and bankruptcies, culminating in his high-profile FTX demise, with fraud charges against FTX founder Samuel Bankman-Fried. indicted.
Both FTX and its sister company, Alameda Research, were Silvergate customers.
US Senators Elizabeth Warren, D-Mass, and two other senators sent Lane a letter last month questioning Silvergate’s protections for FTX and Alameda Research accounts.
Lane said last month that Silvergate conducted “significant due diligence”, continuously monitored the bank’s FTX and Alameda Research accounts, and processed wire transfers in accordance with the sender’s instructions and industry practices.
Over the past year, Silvergate’s stock price has fallen from the $136 level per share to a closing price of 13.20 on January 13th. This is a drop of 90%.
In the fourth quarter, bank deposits plummeted from $11.9 billion to $3.8 billion, down nearly 70%.
“Part of the reason we had to cut as much as our expenses was a reflection of where deposits settled in the fourth quarter,” said Lane.
Banks invested their deposits in liquid bonds, some of which they planned to hold to maturity. Instead, it had to be sold quickly to meet depositor withdrawal demands.
As a result, the company posted a loss of $718 million in the fourth quarter. He also has $300 million in unrealized losses on a group of government and agency-backed securities held for sale.
At the end of the year, Silvergate had a total of $4.6 billion in cash and equivalents, more than remaining deposits from cryptocurrency customers.
Silvergate plans to claim $8 million in severance and job search assistance for laid-off workers. The bank will provide additional details on its financial position when it releases its official fourth quarter results on Tuesday, January 17.
— San Diego Union-Tribune Staff Writer Natalie Rocha contributed to this report. ◆
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