Impact of virtual currency market
Silvergate Capital, which provides crypto-asset (virtual currency)-related services, announced provisional financial indicators for the 4Q (October to December) of 2022 on the 5th.
He pointed out that the digital asset industry is currently at a turning point, such as the bankruptcy of a prominent virtual currency company. The company also acknowledged the difficult business conditions, with customers’ digital asset deposits dropping from approximately 1.5 trillion yen ($11.9 billion) at the end of September 2010 to approximately 506 billion yen ($3.8 billion) at the end of December 2010. are reporting.
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Silvergate Capital is a subsidiary of Silvergate Bank. It was founded in 1988 and is listed on the New York Stock Exchange (NYSE).
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As mentioned above, customer withdrawals increased in 2022 4Q, and the company used funds procured from the market to handle withdrawals. It later said it sold about ¥690 billion ($5.2 billion) of debt securities to maintain liquidity on its balance sheet.
Company CEO Alan Lane commented on the announcement:
In response to the upheaval in the digital asset industry in 4Q22, we took corresponding measures to maintain cash liquidity to meet potential withdrawals.
We currently hold cash in excess of our digital asset deposits.
Silvergate Capital said it is taking steps now to maintain the resilience of its business in the face of difficult circumstances. Going forward, the company said it will readjust expenses and reassess its product portfolio and customers.
The company had acquired the intellectual property (IP) of the diem stablecoin, but said it would not immediately launch a blockchain-based payment solution at this time.
What is Diem
A stablecoin whose development was led by the former Facebook (currently Meta). It was originally called ‘Libra’, but was rebranded to ‘Diem’ in the middle.
association: Meta (formerly Facebook) sells Diem’s intellectual property (IP) to Silvergate Bank in the United States
The company also announced that it will cut about 200 employees. This number represents 40% of the total workforce. In 2022, the company said it rapidly hired more people as its business grew.
Shares of Silvergate Capital fell more than 40% following the announcement. For 2022 as a whole, it is down about 86%.