The FTX Storm Has Not Yet Subsided

February 2023, but the FTX storm is still not over. Moreover, any new news continues to be perceived as a negative wind. We saw the latest example of this recently.

In the last quarter of 2022, cryptocurrency deposits at Silvergate, whose clients included the bankrupt FTX, fell from $11.9 billion to $3.8 billion. Silvergate shares traded on the New York Stock Exchange fell 42.7% in a single day after the data was released. Genesis Global Trading, a cryptocurrency broker and lender to Alameda Research that filed for bankruptcy along with FTX, announced a 30% reduction in its workforce. According to the news, the company was ready to file for bankruptcy.

The Biggest Crypto News Of 2022

The year 2022 was marked by the bankruptcies of cryptocurrency exchange FTX and Sam Bankman-Fried’s investment firm, Alameda Research. Bankman-Fried was caught and prosecuted, but the bitcoin ecosystem continues to feel the effects of the earthquake caused by the bankruptcies.

California-based cryptocurrency bank Silvergate Capital yesterday announced its preliminary financial results for the fourth quarter of 2022.

The FTX Storm Has Not Yet Subsided

$8.1 Billion Loss

According to the report, bitcoin bank deposits, which totaled $11.9 billion at the end of the third quarter, fell to $3.8 billion at the end of the year. FTX’s bankruptcy led to this rapid decline. FTX was one of Silvergate’s most valuable customers.

Of the $3.8 billion in deposits, $150 million came from customers who had filed for bankruptcy. In addition, the company’s need for liquidity led to the sale of $5.2 billion in bonds at a loss of $718 million. In light of these events, Silvergate decided to lay off 200 employees. This represented forty percent of the company’s workforce.

These findings led to a dramatic drop in Silvergate’s stock price on the New York Stock Exchange. The daily decline in the stock was 42.7 percent. As recently as November 2021, Silvergate’s share price had risen as high as $219.8 per share. Yesterday, the price fell to $12.6. In other words, the decline was 94.3 percent from its peak. Silvergate’s market capitalization reached a high of $5.87 billion. A day earlier, it had fallen to $398 million.

Genesis Prepares For Bankruptcy

Cryptocurrency broker and lender Genesis Global Trading was another company affected by FTX’s restructuring.

Genesis planned to reduce its employment by 30 percent after Alameda Research and Three Arrows Capital, which filed for bankruptcy in 2022, funded the company.

According to the Wall Street Journal, Genesis, a subsidiary of Digital Currency Group, which also includes CoinDesk, Foundry, Grayscale Investments and Luno, is preparing to file for bankruptcy.

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Armaan Khatri

I'm Armaan Khatri, a financial writer, editor, and market analyst. A former VP and market risk advisor worken in India at Citizens Financial Group. Have more than 15 years of financial services experience that also includes personal finance, personal banking, IRAs, and retirement services.

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