Two cryptocurrency-related companies have announced significant job cuts due to the effects of the collapse of FTX Trading Ltd. and the broader macroeconomic outlook continues to hit the industry particularly hard.
Topping the list today was a advertisement of the cryptocurrency banking platform listed on the New York Stock Exchange Silvergate Capital Corp.. The company said it was laying off 40% of its workforce "to account for the economic realities facing business and industry today."
The announcement came alongside a financial update from the company, which said its customer deposits of assets were down to $3.8 billion at the end of the fourth quarter. Average daily trading volume on the Silvergate Exchange platform was $1.3 billion, up from $1.2 billion in the prior quarter. SEN leverage commitments decreased to $1.1 billion, down from $1.5 billion.
The fourth quarter annual average outstanding balance of SEN leveraged loans was $328 million, and the company noted that its loans continued to perform as expected with zero losses and forced liquidations.
Those numbers don't necessarily look bad, but deposits fell $7.3 billion in the quarter. As of December 31, about $150 million of Silvergate's deposits were from customers who filed for bankruptcy.
โIn response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure we maintain cash liquidity to meet potential deposit outflows and currently maintain a cash position in excess of our digital asset-related . deposits,โ explained Chief Executive Alan Lane.
Joining Silvergate in Layoffs Today Was a Troubled Crypto Lender Genesis Global Trading Inc., which is cutting its workforce by 30% amid an imminent threat of bankruptcy. The company had previously laid off 20% of its staff. in August.
Layoffs were widespread, with 145 people leaving the company today. According to The Wall Street Journal, Genesis is working with investment bank Moelis & Co to assess its options for the future, including a potential Chapter 11 bankruptcy filing.
Genesis was in trouble as soon as june last year of its exposure to the failed crypto hedge fund Three Arrows Capital Ltd. Things have only gotten worse since the collapse of FTX and related company Alameda Research, both of which had loans with Genesis.
โAs we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our workforce globally,โ a Genesis spokesperson said. "These measures are part of our ongoing efforts to move our business forward."
On the plus side, both Silvergate and Genesis are still trading for now, which can't be said for other companies. The first cryptocurrency-related company to possibly shut down in 2023 is payment infrastructure company Wyre Payments Inc., which is reportedly cease operations at the end of the month. Given the current market turmoil, others will follow in the coming days and months.
