Capital recently announced a 40% reduction in its workforce and the discontinuation of some projects, including a blockchain-based payment solution based on meta’s diem project. this news caused silvergate’s stock to drop 40% in premarket trading due to a “crisis of confidence” across the cryptocurrency industry.
Layoffs and project discontinuations took place in the fourth quarter of 2020, when silvergate’s deposits dropped from nearly $12 billion in the previous quarter to $3.8 billion. ceo alan lane pointed to the collapse of ftx and the resulting domino effect of failures across the crypto ecosystem as contributing to the “crisis of confidence”. silvergate also exited a mortgage warehouse lending business late last year due to rising interest rates and falling mortgage volumes.
Decision to cut staff and abandon the diem project was due to the company’s declining deposits and the resulting “crisis of confidence”. morgan stanley downgraded the business last month due to a predicted decline in deposits as a result of the ftx fallout. silvergate is also facing a class-action lawsuit claiming that the company breached its fiduciary duty with respect to deposits made by ftx and its sister firm alameda research. silvergate’s shares had already been declining due to lower-than-expected q3 earnings and the delay of the then-planned stablecoin project. the layoffs are estimated to cost $8 million, but lane said it was “too early” to say how much money they would save the company.
https://decrypt.co/118483/silvergate-stock-down-40-following-diem-write-off-job-cuts
