Silvergate and Genesis announce layoffs amid ongoing cryptocurrency market turmoil
Two cryptocurrency-related companies have announced significant job cuts as the effects of both the collapse of FTX Trading Ltd. and the broader macroeconomic outlook continue to hit the industry particularly hard.
Leading the list today was an announcement from New York Stock Exchange-listed cryptocurrency banking platform Silvergate Capital Corp. The company said that it was laying off 40% of its workforce “in order to account for the economic realities facing the business and industry today.”
The announcement was made alongside a financial update from the company, which said that its deposits from asset customers declined to $3.8 billion at the end of the fourth quarter. The average daily trading volume on the Silvergate Exchange Platform totaled $1.3 billion, up from $1.2 billion in the previous quarter. SEN Leverage Commitments declined to $1.1 billion, down from $1.5 billion.
The average annual fourth-quarter outstanding balance of SEN Leverage loans was $328 million, with the company noting that its loans continued to perform as expected with zero losses and forced liquidations.
Those figures do not necessarily look bad, but deposits did drop $7.3 billion in the quarter. As of Dec. 31, about $150 million of Silvergate’s deposits were from customers that have filed for bankruptcy.
“In response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows and we currently maintain a cash position in excess of our digital asset related deposits,” Chief Executive Officer Alan Lane explained.
Joining Silvergate with layoffs today was troubled cryptocurrency lender Genesis Global Trading Inc., which is cutting its headcount by 30% amid a looming threat of bankruptcy. The company had previously laid off 20% of its staff in August.
The layoffs were across the board, with 145 people departing the company earlier today. According to The Wall Street Journal, Genesis is working with investment bank Moelis & Co to evaluate its options for the future, including a potential chapter 11 bankruptcy filing.
Genesis was in trouble as early as June last year from its exposure to the failed crypto hedge fund Three Arrows Capital Ltd. Things have only worsened since with the collapse of FTX and related company Alameda Research, both of which had loans with Genesis.
“As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our headcount globally,” a spokesperson for Genesis said. “These measures are part of our ongoing efforts to move our business forward.”
On the positive side, both Silvergate and Genesis are still trading for now, which can’t be said for other companies. The first crypto-related company possibly to close in 2023 is payment infrastructure firm Wyre Payments Inc., which is reportedly ceasing operations at the end of the month. Given the ongoing market turmoil, others will follow in the days and months ahead.