SVB Forced Shutdown Marks Second Largest Bank Failure in U.S. History, Bitcoin Slightly Up

Silicon Valley Bank (SVB), a subsidiary of SVB Financial Group, was officially shut down by the California Department of Financial Protection and Innovation, resulting in the bankruptcy of the second largest bank in US history.

The Federal Deposit Insurance Corporation (FDIC) has been designated as receiver and will ensure that all insured depositors have full access to their funds by March 13. .

According to a press release Friday, the FDIC also created the Santa Clara National Deposit Insurance Bank (DINB) to protect SVB depositors — and all insured deposits have been transferred following the bank’s bankruptcy.

According to the FDIC, insured deposits include accounts that hold less than $250,000.

At the same time, for uninsured depositors, their remaining uninsured deposits will get a “receipt”. Future dividend payments “may go to uninsured savers” as the agency sells SVB assets, the FDIC said.

“As of December 31, 2022, SVB’s total assets were approximately $209 billion and total deposits were approximately $175.4 billion.”

The agency said it still needed more information to determine how much of a bank’s total deposits exceeded the insurance limit.

SVB, with $209 billion in assets, is the biggest bank failure since the Great Recession of 2008, when Washington Mutual collapsed with $307 billion in assets and was later bought by JPMorgan.

The panic surrounding SVB began to spread on Wednesday after the bank announced its intention to raise $2.25 billion and sell a $21 billion bond portfolio to restructure its balance sheet. The second sale cost the company $1.8 billion.

The next day, PayPal co-founder Peter Thiel urged the company to withdraw from SVB, while the bank’s chief executive told customers to “calm down”.

SVB executives, including CEO Gregory Becker, CFO Daniel Baker and chief marketing officer Michelle Draper, sold millions of dollars in stock in the weeks leading up to the events .

SVB’s fundraising efforts ultimately failed, and several companies began considering buying the bank, CNBC reported.

Bank failures may be part of the reason Bitcoin has fallen below $20,000 in the past two days. At the time of writing, BTC is up slightly by 2% and is trading at $20,306.

Source: TradingView

Cryptocurrency companies exposed to SVB

While SVB is not directly involved in the crypto industry, several crypto companies may have had contact with the bank.

Circle held funds in various banks, including SVB, in January. However, the company has recently moved funds between banks and can now hold or not hold funds at SVB.

While it’s unclear exactly how much money Circle holds in Silicon Valley Bank, it currently holds a quarter of its USDC reserves ($11 billion) at the bank.

Circle’s USDC Reserve.

Bankrupt lender BlockFi has reportedly been implicated in SVB. The U.S. commissioner said in a March 10 filing that BlockFi held $227 million at the bank and that the funds were “uninsured.”

Meanwhile, Binance CEO Changpeng Zhao stated that the company has no exposure to SVB. “SAFU fund,” he tweeted.

John Wu, president of Avalanche company Ava Labs, also commented on the situation. On March 9, Wu said that Silicon Valley Bank is a bank that his company trusts. Instead of withdrawing all the money from the bank, Ava Labs has diversified and holds less SVB than in previous weeks and months, he said.

Immutable Labs co-founder Robbie Ferguson said his company has nothing to do with SVB or the bankrupt Silvergate Bank. Immutable is known for its Immutable X blockchain and focuses on Web3 games.

Valkyrie Asset Management said it has no exposure to SVB. However, the company called the news “shocking”.

Blockchain Intelligence Group (BIGG) and Canadian cryptocurrency exchange Netcoins have also denied any involvement with the bankrupt bank.

  • Silvergate collapses, SVB raises emergency funds, US banks in crisis
  • Silvergate Bank decides to cease operations and go into voluntary liquidation


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