A class action lawsuit is now being filed against Silvergate Bank due to its interactions with FTX and Alameda Research. Silvergate Bank has stated that it expects to report a net loss of $1 billion in the fourth quarter of 2022, which will be due to common shareholders.

The digital asset bank highlighted in a report released by the US Securities and Exchange Commission (SEC) that it saw significant deposit outflows in the last quarter of 2022 and took steps to maintain cash liquidity, including wholesale funding. and the sale of debt securities. . These actions were taken because the bank wanted to ensure that it would continue to have access to cash.

In addition to this, the corporation drew attention to a revolutionary change in the field of digital assets. It was noted that a crisis of confidence had spread throughout the ecosystem, causing clients to take a “risk averse” stance on cryptocurrency trading platforms.

According to the study findings, the average value of deposits made by digital asset customers during the fourth quarter of 2022 was $7.3 billion. Compared to deposits in the third quarter of 2022, which were approximately $12 billion, this number is much lower.

Despite the losses, the corporation has said it is moving forward with plans to be ready for an extended period of fewer deposits. Silvergate CEO Alan Lane stressed that the firm continues to have faith in the digital asset market and is dedicated to preserving a highly liquid balance sheet alongside a strong capital position.

As part of the company’s attempts to maintain its financial stability, on January 5 it laid off around 200 of its employees, representing approximately 40 percent of the total workforce.

In response to the events that occurred, the credit rating agency Moody’s Investors Service downgraded Silvergate Bank’s rating. The rating has been lowered from Baa2, indicating a low-medium rating, to Ba1, indicating that the product is “junk”. In addition to this, Moody’s drew attention to the fact that the outlook for Silvergate Capital and its bank is pessimistic.