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Silvergate bank takes $718 million loss liquidating debt during FTX collapse

Silvergate, a Californian bank that primarily serves the crypto industry, and which was FTX's primary banking partner, scrambled to cover $8.1 billion in withdrawals during the chaos surrounding the FTX collapse. This forced the bank to sell some assets at steep losses, liquidating debt at a $718 million loss. This loss far exceeds the bank's total profits since at least 2013, writes the Wall Street Journal.

Silvergate announced that they would be cutting 40% of their staff — around 200 employees. They also announced that they would be taking a $196 million impairment charge on assets they purchased from Diem — Facebook's blockchain-based payment system once known as Libra. "Given the significant changes in the digital asset industry landscape, this charge reflects the Company’s belief that the launch of a blockchain-based payment solution by Silvergate is no longer imminent," they wrote.

Silvergate's stock plunged 41% on the news.

Theme tags: Contagion, Layoffs