Silvergate Capital Corporation shares have tumbled more than 45% this morning after it reported a sharp drop in crypto-related deposits during the fourth quarter amid the fallout from the collapse of crypto exchange FTX.
The company, which provides financial infrastructure solutions to the digital asset industry, said total deposits from digital asset customers came in at $3.8 billion - an $8.1 billion decline from $11.9 billion at the end of the previous quarter.
The company noted that the digital asset industry has undergone a transformation shift with significant over-leverage in the industry leading to several high-profile bankruptcies.
READ: FTX’s top lawyer emerges as key player in collapsed exchange’s criminal investigation
It continued that these dynamics have sparked a crisis of confidence across the ecosystem and led many industry participants to shift to a “risk off” position across digital asset trading platforms.
The company said to accommodate sustained lower deposit levels and maintain its liquid balance sheet, it sold $5.2 billion of debt securities for cash proceeds during 4Q and that it will be reducing its workforce by 40% or about 200 employees.
Silvergate CEO Alan Lane commented: “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.”
Silvergate stock was down 46.8% trading at US$11.67 at mid-morning on Thursday.
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