Silvergate shares plummeted 46% as the company announced to lay off 40% of its workforce, equating to approximately 200 employees.
Silvergate struggles to remain in business
Silvergate, a publicly traded crypto banking company, has had its share price fall 46% as it struggles to remain afloat. Citing the current crypto winter season, Silvergate announced restructuring moves to cut expenses and stay in business. As part of the strategies, the company has announced plans to lay off 200 employees, accounting for at least 40% of its workforce.
Silvergate wrote in an SEC filing that it was taking measures to remain resilient as it faces tough economic times. It added that the only way out for it was cutting the costs of operation. It also added in the filing that it had informed the affected employees two days ago.
As part of the plans to usher out the outgoing employees, the digital asset bank announced offering severance packages and job replacement resources at an aggregate financial penalty of $8 million. It includes $6.1 million worth of “severance payments and $1.3 million in employee benefits”. According to the filing, the company will incur most of the costs in the first quarter of 2023, after which the firm oversees a looming path toward profitability.
Silvergate’s performance in the last quarter of 2022
In the last quarter of 2022, the firm announced the exit of its mortgage warehouse lending services, resulting in a $4 million liability pegged to employee benefits. Towards the end of 2022, Silvergate experienced near bankruptcy with 8.1 million outflows from the financial institution. The firm was forced to sell $5.2 billion worth of security debt at a $718 million loss to cater to the withdrawal transactions.
Silvergate still spearheads crypto investments. The financial institution is focused on offering financial derivatives to investors and centralized exchanges. These activities orient most deposit accounts to cryptocurrencies which account for 90% of the bank’s total deposits.