Silvergate Capital said on Thursday it would significantly reduce its headcount, leaving the firm with a skeleton crew to manage the liquidation of its crypto-friendly bank.
The cuts involve pink-slipping 230 employees tomorrow, followed by additional layoffs later in the year. In a filing with the Securities and Exchange Commission (SEC), the company said it would have just 80 employees by the end of the week.
The company’s California-based lender, Silvergate Bank, shuttered in March. The lender catered to many crypto-native clients like Coinbase, Circle, Paxos, and Gemini. It also operated an instant settlement platform, SEN, used heavily by the bank’s institutional clients.
Silvergate’s remaining employees will help preserve value associated with the company’s remaining assets, respond to regulatory inquiries, and address investigations into the bank and its parent company, the company said.
In its final fiscal quarter of 2022, Silvergate disclosed its clients pulled $14 billion from the lender following the collapse of Sam Bankman-Fried’s crypto empire, FTX. To weather the flurry of withdrawals, it thinned its portfolio of debt securities and took on sizable loans from a government-sponsored bank, sparking criticism from some lawmakers.
The layoffs announced Thursday outweigh job cuts made by Silvergate in January. At the time, the company laid off 200 employees, a 40% reduction, to navigate a “challenging macro environment.”
Silvergate shares plunged in March after the company delayed a key filing with the SEC and raised questions about its ability to continue as a going concern. Leading up to its voluntary liquidation, Silvergate became one of the most shorted stocks on Wall Street, signaling investors smelled blood in the water.
Silvergate said on Thursday it's still unable to fulfill its filing obligations, adding it doesn’t expect to produce audited financial statements in an effort to minimize costs. Additionally, the bank said it has sold all of its debt securities, holding funds in excess of what it needs to repay depositors.
The bank’s closure was felt throughout the digital assets industry as one of the leading crypto-friendly banks, but Silvergate’s shutdown was largely overshadowed by a following tumult among other banks, as Signature Bank and Silicon Valley Bank (SVB) failed days later.
By the end of last year, Silvergate had around $11 billion dollars in total assets, according to Ycharts. The figure represented a 29% decrease compared to a year ago when the digital assets industry was booming.
By comparison, Signature and SVB were much larger. Signature and SVB had around $110 billion and $209 billion in total assets by the end of last year, respectively.