• Silvergate Bank received a $4.3 billion bailout from the Federal Home Loan Bank following the collapse of crypto exchange FTX.
• Withdrawals from Silvergate spiked and its deposits fell by $3.8 billion at the end of 2022 due to FTX collapse.
• Silvergate had limited exposure to FTX and BlockFi, with their deposits accounting for less than 10% and $20 million, respectively.

Silvergate Bank, a San Francisco-based financial institution that provides banking services to crypto exchanges and investors, was in a precarious situation after the collapse of crypto exchange FTX. With 90% of the bank’s deposits coming from crypto, withdrawals from Silvergate spiked and its deposits fell by $3.8 billion at the end of 2022.

In order to protect the bank from further losses, the Federal Home Loan Bank provided Silvergate with a $4.3 billion bailout. Silvergate CEO, Alan Lane, later reported that the firm had less than 10% exposure to FTX as of September 30. Moreover, according to reports, BlockFi deposits accounted for less than $20 million of the bank’s total deposits.

This news of the bailout came as a relief to Silvergate customers, who had been worried that the bank was exposed to bankrupt crypto lender BlockFi. Despite the relief, $8.1 billion worth of digital assets were withdrawn from the bank by December 2022.

In response, Silvergate worked to reduce its risk from FTX, limiting their deposits to less than 10%. They also made sure to limit their exposure to BlockFi, with their deposits accounting for less than $20 million of their total deposits.

Silvergate’s 10 biggest depositors, including Coinbase, Paxos, Crypto.com, Gemini, Kraken, Bitstamp, and Circle, represented about half of the bank’s deposits. The bank is now looking to strengthen its financial position and restore confidence in its services.

The $4.3 billion bailout has provided Silvergate with some breathing room, allowing the bank to continue its operations and provide valuable services to its customers. Silvergate will continue to monitor the market and take the necessary steps to protect its customers and maintain its financial health.

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