35 Burst results for "Silvergate"
The Officer Tatum Show
The Danger of a Central Bank Digital Currency
"RC a couple of points. I want to get to digital currency, but something that I forgot to mention, which is significant, which regardless of how people might feel about crypto right now. Signature bank didn't get the same treatment as did SVB. Why do you suspect that is? So great question, Carl. So signature and silvergate, both banks that are more involved in crypto did not get the same treatment as Silicon Valley bank. So here's the kicker, right? A lot of people think cryptocurrency is just inherently bad. It's actually inherently simple. A true decentralized cryptocurrency everyone would allow you to buy sell and transact without the government being in your business. Now, we all know that the government absolutely hates competition. So that leads you to understand why those banks fail. And why you're being told crypto is inherently dangerous because it gives you a level of freedom. So Carl, let's contrast that for a second with the Central Bank digital currency. There are a number of us out there Catherine Austin fix is one of the best in the world at describing this. But the Central Bank digital currency is inherently dangerous for a couple of reasons. So I'm going to do a simple breakdown and then I'm going to tell you guys how they're laying the foundation to do this right now. So imagine that the government one day is all of a sudden you're back. So let's say with everything that's happened, they say one day, look, the banking system is unstable. The economy is unstable. The government is going to become the bank. You're going to use a Central Bank digital currency. Here's your card, your money's in there, right? Right. Then they decide, well, Carl, you need to spend more. And Carlson, I don't spend, I say it. So they say, we're going to penalize you 10% of your balance every day until you do what we say. Or we're going to tell you to stop spending and penalize you until you do what we say. And then they're going to decide Carl had a state last night. You know what? No more stake for Carl. So you can't go buy it. That's the future of a Central Bank digital currency.
The Breakdown
Is Credit Suisse the Next Banking Domino?
"Right Friends, today we are talking about the same thing that everyone in traditional markets is talking about, which is Credit Suisse. Bloomberg's headline Blair's Credit Suisse and fight to win back confidence as shares plunge. And that headline has recently been updated to the even scarier Credit Suisse ignites global market route as banking fears return. So what's going on is Credit Suisse the next domino is it a big nothing burger? Is it something totally different, but it doesn't matter that it's totally different because all people here is bank failure and they get scared, let's dive in. So Credit Suisse has been looking shaky for a while. It's in the midst of a larger restructuring process by which its investment banking division will be spun out and the bank will focus just on its wealth management division. This is actually its second big strategic pivot in the last two years and obviously in the world of banking, that sort of bobbing and weaving isn't necessarily something investors get too excited about. To say nothing of course of depositors. Now right now, the specter of Silicon Valley bank is hanging not only over Credit Suisse, but the whole banking sector. This is despite the fact that Credit Suisse's leadership says there's no comparison, and that the bank trying to get back to profitability after changing its strategy has nothing to do with the extreme liquidity issues of smaller U.S. banks. However, this morning markets were further roiled when the chairman of the Saudi national bank, which is Credit Suisse's biggest shareholder, said that they would not be investing any more money into the beleaguered bank. The chairman of the Saudi national bank said that the biggest reason is just regulatory and statutory reasons that prevent them from boosting their share beyond the just under 10% they own now. Now as prosaic that might be, it obviously still wasn't good news. CSS shares were down as much as 29% hitting a new all time low. They're one year default swaps are also in a distress zone currently sitting around 18 X, the one year CDS for UBS, and 9 X for Deutsche Bank. Now, all in all, there are two big and quite different interpretations of what's going on. Investor in China perma bear, Kyle bass writes the recent collapse of SVB, signature bank, and silvergate bank was a warmup of larger things to come outside of U.S. borders. Credit Suisse's 5 year insurance against default has gone parabolic this morning, given their capital structure they now have three weeks or less to be sold.
Crypto Current
USDC Depegged? Close Call
"So Silicon Valley bank collapsed. So over the last week, a lot of things happen in secession. First, last week we were reported on silvergate starting to have some challenges. It ultimately collapsed when under. Shortly after you had this bank now go under, which was very unfortunate. Silicon Valley bank, which is host a lot of regular web two VCs. So of the amount of money that it had in its reserves, only about 3% are FDIC insured, which means that the $250,000 that the federal government ensures up to depositors, only 3% of those people were covered. So 97% had more than that amount in there, which was a huge news and kind of sent not only the traditional markets in a freefall, but also was a huge risk for USD C as it got depict because it came out that SVB is had a certain amount of USD C had a certain amount of their money in SVB. Roughly three $1 billion. So that caused USD C to the peg. And as soon as that started to happen, you saw the entire crypto market kind of going to freefall down. Over the last week. Now, as that happened over the weekend institutions like coinbase stopped all of USD C trading until Monday and what the FDIC happened, they came in and they restructured over the weekend and basically stopped the freefall that was happening about the traditional markets. And the crypto markets and got USD C in a stable place to where they no longer have that for $3 billion loss on books. They are now covered. And what you saw in response to that was an absolute short squeeze happened in the market.
The Breakdown
The Banking System Broke; Will That Force a Fed Pivot?
"All right guys, it continues to be interesting times and today was supposed to be the big financial event of the week with the CPI report. So let's pick up the story from where we left off yesterday and see if the CPI report actually had as much significance as it might once have seemed. So here's where we were. The falling dominoes were silvergate closing down on Wednesday, Silicon Valley bank being put into receivership on Friday, and over the weekend, the squawking chaos is the tech industry viewed itself facing moral peril. All of this led to the fed's coming in on Sunday Night as the white knight, saying, hey, we're invoking systemic risk. Everyone's deposits are safe, management is not protected and taxpayers don't have to foot the bill. Oh, and by the way, we shut down signature bank as well. Yeah, the crypto won. No, don't ask us to explain why. And into all of that on Monday morning, market started in turmoil. First republic began the day 70 plus percent down in small and regional banks everywhere had their trading halted for volatility. However, then, at least in the non banking sectors, markets started to recover and even move into the green. Many commentators were incredulous. Dimitri kofinis from the inimitable hidden forces wrote, we got a global pandemic that killed millions of people, the start of a potential World War that could kill millions more, the steepest interest rate cycle in 40 years and now the second largest bank failure in U.S. history and markets are still like nah, we going up. And it wasn't just stocks. Crypto absolutely roared yesterday led by Bitcoin, which was up nearly 20% on the day. And by the way, has continued to increase today as well, hitting 26,000 at the time of this recording. So what the heck you may ask is going on. Well, let's talk first about the crypto side. Yesterday I did a YouTube video exploring three possible explanations for why Bitcoin was going up. The first one is the one I'd most like to be true. And that is that this moment is piercing the veil of people's perceptions of the solidity of the banking system and showing them that they are a part of something that is more complex and risky than they might have been led to believe. Even if one isn't clamoring for the destruction of the fed and the end of Fiat money, it certainly strikes us that it might be better if a more informed electorate better understood the part they play and more specifically the role their money plays in the system we have
The Breakdown
Was Signature Shut Down to Send an Anti-Crypto Message?
"We are in the thick of it. The last 48 hours have been some of the loudest, most contentious times we've seen since 2008. There have been fierce debates about whether or not to protect depositors at Silicon Valley bank after it was shut down by regulators on Friday, accusations that the venture capital class was fomenting a larger run on small and regional banks just to serve its own purposes. Genuine fear of larger contagion and intense pressure on the federal government to announce action to give small businesses and other depositors confidence that they weren't going to be out of luck based on who they chose to banquet. Out of the combination of it last night, there was finally an announcement about what was to happen with Silicon Valley bank. The TLDR was that the bank depositors would be made whole. The fed would use a fund already paid into by banks to pay for it. IE no taxpayer money, shareholders and management would be wiped out, and on top of all that, a new fed funding facility was being established to try to address the underlying issues. Oh, and also, by the way, signature bank was being shut down as well because of quote unquote systemic risk. Wait, signature bank you say? Wasn't that sort of the last remaining bank servicing crypto companies? The same one that had been under intense pressure for the last few months to stop servicing those that crypto companies had switched over to after silvergate announced a voluntary wind down last week. Yep, that's the one, and wait, you might also say, no other bank was preemptively placed in FDIC receivership before markets even opened? Even others, like first republic that we're facing even more scrutiny from investors, that's correct. It was just the bank servicing crypto customers that was unaligned by the U.S. government. I asked last week whether silvergate was a political assassination. I pointed to the gloating of politicians like Elizabeth Warren and sherrod Brown in the aftermath to the open letters from war and senator Kennedy and others that undermined confidence in silvergate back in December, and I also asked questions about why silver Gates FHLB $4.3 billion loan had been withdrawn so quickly after it was made. Even with all that, the preemptive shutdown of signature bank before there was a true bank run is even more egregious and attack on crypto by a group of regulators who hate it. Matthew Graham wrote this morning, I truly can't believe I'm saying this. I sound like some kind of conspiracy theorist, but I think at this point the preponderance of evidence is that signature bank was primarily an opportunistic anti crypto hit job. More likely more so than not.
Coin Journal
Silvergate Capital, SVB failures weigh on Bitcoin price
"9 a.m. Sunday March 12th, 2023. Silvergate capital, SVB failures weigh on Bitcoin price. Bitcoin finds support at 20 K many cryptocurrency companies had exposure to SVB Bitcoin investors should keep an eye on the SP 500 and the fed cryptocurrency investors had a rough 2022. Bitcoin and other major cryptocurrencies trended lower affected by the FTX failure, which triggered a loss of faith in the industry. But the market the post silvergate capital SVB failures weigh on Bitcoin price appeared first on coin journal.
Blockonomi
Game Over Silvergate Bank in Liquidation
"11 a.m. Thursday March 9th, 2023. Game over silvergate bank in liquidation. The threat of bankruptcy has extended and nothing else could save the crypto bank except itself. Silvergate announced today it would shut down operations and liquidate its bank in an effort to cope with the recent crisis. According to silver Gates declaration on business wire, silvergate capital corporation, the parent company of silvergate bank, plans to. The postgame over silvergate bank in liquidation appeared first on blocking only.
The Block
What the failures of Signature, SVB and Silvergate mean for the crypto sector
"Monday, march 13th, 2023. USD C, crypto rallies on news that SVB, signature bank deposits are safe. Crypto markets rallied after regulators said both SVB and signature bank reserves would be returned. While USD C nearly regained its peg. The post USD C, crypto rallies on news that SVB, signature bank deposits are safe appeared first on the block.
Forkast
Weekly Market Wrap Bitcoin falls below US20,000 as Silvergate collapse, rate hike concerns rise
"5 p.m. Friday March 10th, 2023. Weekly market wrap Bitcoin falls below U.S. 20 zero zero zero as silvergate collapse, rate height concerns rise. Bitcoin fell below U.S. 20 zero zero zero for the first time since January 13th on the back of crypto bank silver Gates collapse, and the U.S. fed signaling higher than expected interest rate hikes.
Crypto Briefing
Crypto Friendly Bank Silvergate Shuts Down
"4 p.m. Thursday March 9th 2023 crypto friendly bank silvergate shuts down. Silvergate bank is winding down operations, but it assured that all customer deposits would be fully repaid. Traditional banking risks another pillar of the crypto industry has succumbed. Silvergate capital
CryptoCompare
Market Analysis Report 08 Mar 2023
"10 a.m. Wednesday March 8th, 2023. Market analysis report march 8th, 2023. Voyager bankruptcy judge approves binance to U.S. 1.3 billion deals silvergate bank talks with FDIC to stay afloat MakerDAO proposes allocation of 750 million to U.S. treasuries.
CryptoCompare
Market Analysis Report 09 Mar 2023
"10 a.m. Thursday March 9th 2023 market analysis report March 9th, 2023. Silvergate bank to wind down operations CFTC chair says stablecoin and ether are going to be commodities coinbase announces wallet as a service offering.
Bitcoin Market Journal
How Silvergate Bank is Impacting Crypto
"5 p.m. Friday March 10th, 2023 how silvergate bank is impacting crypto your top ten weekly fundamentals. The post how silvergate bank is impacting crypto appeared first on Bitcoin market journal.
The Breakdown
Silicon Valley Bank Becomes Largest Failure Since 2008 Crisis
"For the purposes of our conversation today, the key dynamic in silvergate that we want to think about is this idea of a duration mismatch between short term deposits and long-term loans. It is also worth noting at this point that banks having that sort of duration mismatch isn't necessarily them acting badly. It is fundamentally what fractional reserve banking does. Joe wiesenthal from Bloomberg tweeted, every time a bank gets into trouble, people are like, they took short term deposits and made long-term loans. What were they thinking? As if that's not the business model of every bank ever. All of which gets us to Silicon Valley bank. For the TLDR in this situation, I'm going to turn to a great little explainer from investor Jamie quint. Jamie writes, in 2021, SVB saw a mass influx in deposits, which jumped from 62 billion or so at the end of 2019 to around a 190 billion at the end of 2021. As deposits grew SVB could not grow their loan book fast enough to generate the yield they wanted to see on this capital. As a result, they purchased a large amount over 80 billion in mortgage backed securities with these deposits for their hold to maturity portfolio. 97% of these mortgage backed securities were ten plus year duration, with a weighted average yield of 1.56%. The issue is that as the fed raised interest rates in 2022 and continued to do so through 2023, the value of SVB mortgage backed securities plummeted. This is because investors can now purchase long duration, quote unquote, risk free bonds from the fed at a 2.5 X higher yield. This is not a liquidity issue as long as SVB maintains their deposits. Since the securities will pay out more than they cost eventually. However, yesterday afternoon, SVB announced that they had sold 21 billion of their available for sales securities at a $1.8 billion loss, and were raising another 2.25 billion in equity in debt. This came as a surprise to investors who were under the impression that SVB had enough liquidity to avoid selling their AFS portfolio. So as you can see, here we again have the same structural problem faced by the assets in silver Gates portfolio. Those assets had unrealized losses because interest rate increases in the wider environment had made them less valuable relative to government bonds, which wouldn't have been an issue unless they were forced to sell, but boom, all of a sudden they were forced to sell.
Bankless
"silvergate" Discussed on Bankless
"At the firm's headquarters last week and have been since reviewing the firm's books and records. The department is evaluating compliance with all financial laws, as well as safety and soundness obligations and is working closely with relevant federal counterparts. So I think there's probably a big question out there is like, was it silver Gates fault or was it external forces that have caused this? I don't we'll have to find out. I don't know if there's any reason to suspect silvergate of anything, but I guess we're going to find out either way. Do you have a take on this round? Well, a lot of people encrypt are saying that this is basically a run on the bank, perpetrated by people in power, those regulators and politicians going on the megaphone and saying the operation choke point sorts of sorts of measures. People like Elizabeth Warren, for example, broadcasting this and saying, withdraw withdrawal funds from these crypto banks, these crypto companies. And I would say the broader point is, remember guys, we live in a fractional reserve banking system. That means any bank, whether it's Wells Fargo, bank of them, any commercial bank that you use operates on faith. Operates on faith. And so if there was a run on the bank and you decided to withdraw all of us decide to withdraw all of our money at once, that's it, we can't get it. It doesn't exist, guys, it doesn't exist. It's a fragment. That's how the system works. Yes, it's a figment of our imagination. It's all kind of on the ledger and it all works as long as everyone trusts it and the FDIC has a 250 K guarantee and all of these things. So there is some element David where, yes, they probably were sloppy in areas, is kind of my take right now based on the evidence I've seen. Yes, silver gate could have done additional AML KYC in places. They could have had some tighter risk policies. But I don't think this is not an FTX type situation, right? I don't think that there was anything incredibly nefarious going on, at least the evidence hasn't borne that out yet. But what I do know is there has absolutely been a run on this bank. And perpetuated in some, in some cases, by regulatory congressional influencers who are pushing silvergate towards the edge. And to that extent, I mean, I would say that is extremely irresponsible. Right. Just to start this from the beginning of a run on the bank is a fear and emotion based phenomenon from all bank from all customers, clients, depositors of that bank. And so if there is this run on the bank that's happening and the reason why silvergate is shutting down is because there's just so much net outflow out of the bank because everyone is fearful that silver gate is going under. And that fear perpetuates, right? Turns into a mind virus.
The Crypto Overnighter
"silvergate" Discussed on The Crypto Overnighter
"Hey, welcome back to the crypto overnighter. My name is nicodemus and we do crypto news analysis nightly at 10 p.m. and keep in mind none of this should be considered financial advice. And it's Thursday, March 9th, 2023. And writing this part almost felt like a eulogy. Sever gate bank will close down voluntarily in liquidated assets. The bank faced criticism after disclosing a week ago that it would need to postpone filing its annual ten K report because its independent auditors and the accounting firm questioned its numbers. In an announcement on Wednesday, segregate stated that it had retained center view partners as a financial adviser, Kravitz swain and Moore LLP as a legal firm and strategic risk associates for assistance with transition management. The company stated that all deposits would be fully refunded during the winding down process. Silvergate corp announced that considering recent developments in the industry and regulation the best course of action is to orderly wind down into orderly liquidate the bank. The plan includes the full repayment of all deposits, and the company is considering how to resolve claims and protect the value of its assets, including its proprietary technology and tax assets. The California department of financial protection and innovation regulates the firm. They said that they're keeping and watchful eye on the situation. Commissioner Hewlett said that the department is examining compliance with financial laws as well as safety and soundness obligations and collaborating with relevant federal counterparts. White House press secretary karine Jean Pierre said earlier this week that president Joe Biden would persist in urging Congress to take action on crypto related issues. The Senate making committee chairman sherrod Brown stated in a release that silvergate banks winding down is a clear indication of what can happen when a bank depends too much on a high risk and volatile sector such as cryptocurrencies. Brown expressed concern that when banks engage with crypto, it spreads risk throughout the financial system. This results in taxpayers and consumers bearing the brunt of the damage. To protect the financial system from the dangers of crypto, he is collaborating with his colleagues in Congress and financial regulators to create robust safeguards. It didn't help that last week, silvergate revealed that it was facing investigations from bank regulators and the Department of Justice. That raised doubts about its ability to function as a going concern for the next year. And as a consequence, major crypto clients announced their decision to cut ties with the bank. The holding company's stock value plummeted by 58% in intraday trading to an all time low of $5 and 72 cents. That's a decrease of over $115 in the last year. The stock price dropped further after Wednesday's announcement during after hours trading. Signature bank, another bank friendly to the cryptocurrency industry, experienced a similar drop with its stock value declining by roughly 5% in after hours trading and dipping almost 10% before slightly bouncing back. Supergate bank obtained loans of roughly $4.3 billion from the federal home loan bank of San Francisco. That said, the FDIC should have been concerned about surrogates condition several months ago. Since 2013, surrogate has been offering banking services to crypto businesses and introduced its own settlement system. The silvergate exchange network. However, on Friday, silvergate announced that it had suspended the SEN. When silvergate filed to go public in November of 2018, it disclosed that it had around 500 crypto clients. In 2019, it completed its IPO and traded on the New York Stock Exchange. And at that time, the bank claimed to have more than 750 crypto clients. So brigade is going through a voluntary liquidation, and that means that silvergate is not going to be on the FDIC's failed bank list. It does appear to be the first significant bank collapse since October of 2020 and likely the largest bank to fail since 2009. In related news, marathon digital holdings announced that it had paid off its term loan and credit facilities with silvergate bank. The repayment helped to decrease the company's debt by $50 million. Marathon's chief financial officer, Hugh Gallagher, stated that they'd been working towards strengthening their balance sheet by increasing their cash in Bitcoin holdings. Gallagher also said that the company decided to eliminate both the term loan and revolving line of credit facilities because it was in the company's best interest given their current cash position. The dates for mount gox creditors registration have been pushed back by a month. Creditors can now file claims until April 6th instead of March 10th. The distribution deadline has also been moved back by a month. Distribution of assets will now begin from October 31st instead of September 30th. The official document gave reasons for the change in deadlines. These included the progress made by rehabilitation creditors. The creditors have different options for receiving compensation, such as a lump sum payment, bank remittance, or using a fund transfer service provider or cryptocurrency exchange. Mount gox suffered a major hack back in 2014. The incident caused losses for the creditors, and these creditors have been waiting for years to be made whole. And this was a big deal at the time, because when the hack happened, mount gox accounted for more than 70% of Bitcoin transactions. After the theft, thousands of Bitcoin were stolen, and the exchange filed for bankruptcy. In February, the biggest creditor of mount gox opted for an early payout in Bitcoin rather than waiting longer for a larger payment after a legal battle. This early payout means that creditors would receive about 90% of the due amount. The creditor chose to be paid in Bitcoin, so the bankruptcy trustee doesn't have to sell tokens to get Fiat funds for the repayment. As a result of the extension, other creditors now have an extra month to decide whether to take the lesser amount immediately or to wait for another 9 years to receive the full amount. For a while now, the payout to mount gox creditors has been a topic of interest. This is especially so because the value of Bitcoin has increased significantly since the exchange went bankrupt. There have been several concerns about how the market could be affected by the creditors if they decided to sell their holdings. Bloomberg reports that the most prominent mount gox creditors do not plan to sell their Bitcoin. Now, frankly, I think the hand wringing over the release of the mount gox Bitcoin is just a bit much. Even if they open up and they hand out all those Bitcoin and every single one of those Bitcoin hits the market. That's a drop in the bucket compared to the total liquidity in the Bitcoin market. Bitcoin is tough. It can take it. Don't sweat the mount gox stuff. The phrase, a drop in the bucket comes to mind. One drop in a very big bucket. Missouri state legislators have voted in favor of amending House Bill 7 64 on March 7th. Introduced in January, it aims to define the language used in relation to cryptocurrency miners. The amendments also seek to protect the right to operate without discrimination, especially from the energy sector. The newly added sections to the bill are designed to establish the legal framework for handling digital assets in the state. This is a particular emphasis on cryptocurrency mining. The amendments address various topics, including energy consumption and sound pollution. The document differentiates between mining businesses and home miners and provides
The Breakdown
"silvergate" Discussed on The Breakdown
"Now it is worth noting at this point that despite all these comments, not a single dollar of taxpayer money has been used to address the collapse of silvergate so far, the FHLB loan was repaid in full, no customers have reported being unable to withdraw their deposits and silvergate have committed to returning all deposits in full. The most that can really be said about silvergate being a burden on government resources is that they will likely need to collaborate with the FDIC to shut down in an orderly manner, but that's a role that the regulator is explicitly tasked with performing. Now, of course, there are other questions that surround silvergate as someone who was deeply personally affected by the fraud perpetrated at FTX. I want senators and everyone else asking questions about what silvergate knew when. I think that allegations around anti money laundering concerns need to be played out in full. But I also think it's important that there is a thing called due process in this country, where when you face those sort of allegations, you are investigated. Thoroughly and by the appropriate authorities. That's quite different than having your business detonated by senators who are looking to score media points and perpetuate their broader narrative. Ramallah, the CEO of lomi wealth pointed out the issue with senator Warren injecting herself into the regulatory process. He wrote silvergate the first crypto bank faced a bank run that led to its downfall. Despite facing allegations around AML, it was not these issues that ultimately caused the demise of silvergate. The responsibility for bank supervision lies with the executive branch, but this process was cut short. A senator's letter, amplified by social media, undermined public trust in silvergate, ultimately leading to a crisis of confidence. It is important to uphold the principle of due process. Silvergate was denied due process. The senator's allegations should not be used to justify the destruction of a Federal Reserve banking member in a 120 character Twitter thread. Founder Ryan selk is wrote yesterday. It's market manipulation when
The Breakdown
"silvergate" Discussed on The Breakdown
"Giving crypto companies banking access is officially winding down. Today we're going to deep dive on the closure and how we got here because I think the how is incredibly important. I think that there are three possible interpretations of this whole affair. The first, let's call crypto risk. The idea that this was some inevitable byproduct of bankers getting involved with the overly risky crypto sector. This you might sum up as the Elizabeth Warren position. The second possible interpretation is that silver Gates failure wasn't strictly a byproduct of crypto risk, but had to do with specific risks that silvergate took in its business. In other words, specific business decisions they made. The third possible interpretation is that this was a coordinated hit led by a combination of short sellers and antagonistic politicians out for blood in the wake of the collapse of FTX. So keep those three possibilities in mind as we dig into the story. On Wednesday, silvergate bank announced that it would quote voluntarily liquidate its assets and wind down operations. A press statement explained, quote, in light of recent industry and regulatory developments, silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the bank is the best path forward. The banks wind down in liquidation plan includes full repayment of all deposits. The company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets. Outside legal, financial and project management advice firms have been appointed to assist with the winding down process. Now silvergate has looked shaky since announcing last Wednesday that it would be delaying the filing of its ten K annual report. The delay notification stated that silvergate needed more time to assess how regulatory investigations and losses associated with last November's $8 billion bank run had affected its earnings. The filing suggested that the situation of the bank could be dire, explaining that these events had led management to evaluate the bank's ability to continue as a going concern. In the fallout from last week's announcement, silvergate rapidly shed its crypto customers as one by one major crypto firms announced that they had cut ties with the distressed bank over the course of the following day. Stock tumbled collapsing by more than 60% to an all time low after having already drawn down by more than 90% in the previous 12 months. In the wake of all that, silver gated announced that they were closing their silvergate exchange network or seine, which was a near instant settlement network between customers that held accounts with silvergate and was used extensively by crypto exchanges and
The Breakdown
"silvergate" Discussed on The Breakdown
"All right guys, well, it has happened. As of last night, silvergate bank, one of the pioneers in giving crypto companies banking access is officially winding down. Today we're going to deep dive on the closure and how we got here because I think the how is incredibly important. I think that there are three possible interpretations of this whole affair. The first, let's call crypto risk. The idea that this was some inevitable byproduct of bankers getting involved with the overly risky crypto sector. This you might sum up as the Elizabeth Warren position. The second possible interpretation is that silver Gates failure wasn't strictly a byproduct of crypto risk, but had to do with specific risks that silvergate took in its business. In other words, specific business decisions they made. The third possible interpretation is that this was a coordinated hit led by a combination of short sellers and antagonistic politicians out for blood in the wake of the collapse of FTX. So keep those three possibilities in mind as we dig into the story. On Wednesday, silvergate bank announced that it would quote voluntarily liquidate its assets and wind down operations. A press statement explained, quote, in light of recent industry and regulatory developments, silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the bank is the best path forward. The banks wind down in liquidation plan includes full repayment of all deposits. The company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets. Outside legal, financial and project management advice firms have been appointed to assist with the winding down process. Now silvergate has looked shaky since announcing last Wednesday that it would be delaying the filing of its ten K annual report. The delay notification stated that silvergate needed more time to assess how regulatory investigations and losses associated with last November's $8 billion bank run had affected its earnings. The filing suggested that the situation of the bank could be dire, explaining that these events had led management to evaluate the bank's ability to continue as a going concern. In the fallout from last week's announcement, silvergate rapidly shed its crypto customers as one by one major crypto firms announced that they had cut ties with the distressed bank over the course of the following day.
The Breakdown
The Real Reasons Silvergate Collapsed
"All right guys, well, it has happened. As of last night, silvergate bank, one of the pioneers in giving crypto companies banking access is officially winding down. Today we're going to deep dive on the closure and how we got here because I think the how is incredibly important. I think that there are three possible interpretations of this whole affair. The first, let's call crypto risk. The idea that this was some inevitable byproduct of bankers getting involved with the overly risky crypto sector. This you might sum up as the Elizabeth Warren position. The second possible interpretation is that silver Gates failure wasn't strictly a byproduct of crypto risk, but had to do with specific risks that silvergate took in its business. In other words, specific business decisions they made. The third possible interpretation is that this was a coordinated hit led by a combination of short sellers and antagonistic politicians out for blood in the wake of the collapse of FTX. So keep those three possibilities in mind as we dig into the story. On Wednesday, silvergate bank announced that it would quote voluntarily liquidate its assets and wind down operations. A press statement explained, quote, in light of recent industry and regulatory developments, silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the bank is the best path forward. The banks wind down in liquidation plan includes full repayment of all deposits. The company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets. Outside legal, financial and project management advice firms have been appointed to assist with the winding down process. Now silvergate has looked shaky since announcing last Wednesday that it would be delaying the filing of its ten K annual report. The delay notification stated that silvergate needed more time to assess how regulatory investigations and losses associated with last November's $8 billion bank run had affected its earnings. The filing suggested that the situation of the bank could be dire, explaining that these events had led management to evaluate the bank's ability to continue as a going concern. In the fallout from last week's announcement, silvergate rapidly shed its crypto customers as one by one major crypto firms announced that they had cut ties with the distressed bank over the course of the following day.
CoinDesk Podcast Network
The Crypto Industry's Banking Crisis
"Plenty going on a little bit of a crypto banking crisis going on and Jen is going to take a hack at that one with the first story of the day. What do you got? All right, so in the face of this crypto banking crisis, crypto dot com is struggling to maintain its Fiat on ramps. The exchange's current banking partner is only accessible to users in the European Economic Area and in other news, you'll remember we spoke about silver gate yesterday working with the FDIC to try and stay afloat. Now they are saying that they are going to voluntarily liquidate and wind down operations. Zach, I'm going to toss this one off to you. Where do we go from here? Yeah, we were talking just yesterday like watch this story and that sure enough voluntary liquidation hit that night. Wow, amazing. Anyway, silvergate was, as we discussed yesterday, a major partner to many crypto firms in the space, providing both Fiat, offering up on ramp, and also just banking services, right? They had been sort of a pioneer in serving an emerging sector. And by way of their association with FTX and almita, they seem to have passed away. So they're being wound down, that's something that sends multiple players in the space scrambling to look for additional banking partners. And I think it's becoming more and more difficult. Again, in the wake of this joint pronouncement in January from U.S. banking regulators that touching crypto is bad, according to them. And so therefore, people are trying to figure out how to make this work. It really does seem as though crypto and the U.S. is in crisis right now. Off ramp into the beloved U.S. dollar is indeed compromised at scale, right? There's still several banky partners out there signature we mentioned yesterday. Customers bank, we mentioned previously. But these are banks that are potentially proceeding at their own risk, right? They probably have better risk parameters in place. A lot of them didn't have exposure to FTX, so they should be fine
CoinDesk Podcast Network
"silvergate" Discussed on CoinDesk Podcast Network
"Any signs of cooling inflation. He noted that real GDP growth was below trend last year, while the labor market remains very strong. Powell repeated previous guidance at the FOMC quote continues to anticipate that ongoing increases in rates will be appropriate. He then presented the new guidance that fed watchers and markets had been anticipating. Quote, the ultimate level of interest rates is likely to be higher than previously anticipated. Powell confirmed that the FOMC would be willing to do more, quote if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes. In other words, Powell was saying, raise rates at 50 basis points per session rather than 25 basis points. Closing out his remarks, Powell, once again pointed out that the historical record strongly warns against backing off on rate hikes until inflation has been snuffed out. Now what matters with things like this is all about the market's interpretation and the TLDR was that hawkish Powell showed up and that the higher for longer memo finally landed. The big takeaway for markets was Powell's guidance that the terminal rate would likely be forecast higher when the FOMC meets later this month. During the hearing the two year treasury yield shot up, driving above 5% to its highest level since 2007. Keep in mind, the terminal rate is often closely linked to the two year yield. Fed funds futures markets which are typically a solid forecasting mechanism for an upcoming FOMC decision, flip their bets. Going into the hearing the market to price the chance of a 50 basis point hike this month at less than 30%. Once Powell started talking about a higher terminal rate, that probability rapidly moved and is now sitting at over 60%, meaning that markets have now priced in a base case that the fed will go back to larger rate hikes immediately. Even more dramatically, markets are beginning to price in some probability that the fed will need to take rates above 6% during the third quarter. The dollar index reacted strongly gaining 1% in the hours following the hearing to reach a three month high. Risk markets were obviously taken a bit of back by bowels, testimony. Both the S&P 500 and the NASDAQ sold off by more than 1.2%. Bitcoin fared relatively better falling less than 1%, but tumbled out of its tight range around 22,400, and momentarily lost the key level of 22,000. But what about other questions in the testimony? Is there anything in their worth discussing? I would say that there were two big winners in the grandstanding competition one from each side of the aisle. One of them was Elizabeth Warren. If rod brown's job for the Dems was too labeling for inflation on corporate greed, Warren's job was to call out rising unemployment as too high a cost for the fed's chosen remedy to inflation. The senator from Massachusetts came firing out of the gate with a clear agenda. She said, quote, the fed has raised interest rates 8 times over the last year and what has been the most extreme rate hike cycle in 40 years. Your tool is designed to slow the economy and throw people out of work. Her questioning was premised on the idea that inflation had a range of factors, including corporate price gouging, just like we had heard about from sherrod Brown, as well as the ongoing war between Russia and Ukraine. Warren pointedly asked whether chairman Powell knew how many people would lose their jobs by the end of the year, based on current fed projections. Powell said that he did not have the numbers in front of him, but that this was an unintended consequence. Obviously, unsatisfied with his answer Warren asserted that higher unemployment was in fact the obvious consequence of current fed policy and added that 2 million people were likely to lose their jobs, arriving at her soundbite Warren esque power, quote, if you could speak directly to the 2 million hardworking people who you're planning to get fired over the next year, what would you say to them? Paul replied I would explain to people more broadly that inflation is extremely high. And it's hurting the working people of this country badly. All of them, not just 2 million. We are taking the only measures we have to bring inflation down. When pushed further a clearly agitated Powell asked, we're working people be better off if we just walk away from our jobs and inflation remains at 5 or 6%. Having made her point that recession is somewhat inevitable on the fed's current course, Warren asked a Powell can quote stop it at 2 million people. She said quote history suggests that the fed has a terrible track record of containing modest increases in the unemployment rate. Once the economy starts shedding jobs, it's kind of like a runaway train. Regaining his composure Powell simply stated right now the unemployment rate is 3.4%, which is the lowest in 54 years. We actually don't think we need to see a sharp or enormous increase in unemployment to get inflation under control. Bringing her time to a close Warren said in other words, you don't have a plan to stop a runaway train if it occurs. Chair Powell you are gambling with people's lives. You cling to the idea that there is only one solution lay off millions of workers. We need a fed that will fight for families, and if you're not going to leave that charge, we need someone at the fed who will. Now, there are a lot of people who rightly point out how much of Elizabeth Warren's position here comes from her political image making versus any real understanding of the economics. However, there is an underlying question that's probably worth asking. One of the most farcical aspects of all of this is that monetary policy is being asked to fix a problem almost entirely on its own that was not entirely of its own making. Yes, it's quite clear that the fed deserves their share of blame for taking an entire year off of raising rates under the banner of inflation being quote unquote transitory. However, the root causes of inflation involve some combination of supply demand, mismatch following dislocations from COVID, fiscal policy, which put excess money in the hands of citizens and more. Now, however, the only tool being used to fight inflation is monetary policy. The only string Powell has to push on is demand destruction. As pal has often point out, he can't make it so that there's more supply of things. His only tool is to make it so people can't buy things, so they stop buying them and so prices for them come down. That's obviously oversimplified, but not really that much in essence. And the damnable thing about that is that the tools that Powell has to do this are basically going to hurt the most for the same people that inflation is hurting the most.
Techmeme Ride Home
"silvergate" Discussed on Techmeme Ride Home
"Welcome to the tech meme right home for Thursday, March 9th, 2023 on Brian McCullough today, silvergate capital is shutting down, so the crypto winter just got even colder. Microsoft says the new Bing has crossed a 100 million daily active users why TikTok is responsible for the new Spotify redesign, can please grab your ring camera footage without your permission even if you're not the target of an investigation and looks like strike won't be going public this year after all. Here's what you missed today in the world of tech. Silvergate capital plans to wind down operations and voluntarily liquidate silvergate bank, including full repayment of all deposits. So basically saw a bank run with customers withdrawing $8.1 billion over the last quarter. This is notable because silvergate was one of the pioneers and biggest players in the attempt to bridge the crypto industry with the traditional banking sector, quoting the block. In light of recent industry and regulatory development silvergate believes that an orderly wind down of bank operations at a voluntary liquidation of the bank is the best path forward. The firm said in a Securities and Exchange Commission filing, the bank's wind down and liquidation plan includes full repayment of all deposits. The company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets and quote. Silver Gates liquidation raises serious questions about how the sector will be regulated in the near term and how crypto firms will access the banking system said Alex Moore partner at the law firm of Carrington Coleman sloman and blumenthal on the one hand legitimate questions were raised by lawmakers and litigants about silver Gates oversight of its banking relationships with crypto clients to the extent silvergate had problems with its internal controls that it could not resolve. Maybe it's for the best that it's choosing to wind down more said. On the other hand, the crypto community is already hindered by limited
The Crypto Overnighter
"silvergate" Discussed on The Crypto Overnighter
"And keep in mind none of this should be considered financial advice. And it's Wednesday, march 8th, 2023. According to Bloomberg, the federal deposit insurance corporation is working with silvergate capital. They're working together to find ways to keep those silver gates open. The FDIC has reportedly been in talks with surrogates executives. Sources suggest that one possible solution would be to find investors from the cryptocurrency industry to provide funding as well as increasing silver Gates liquidity.
Crypto Curious
"silvergate" Discussed on Crypto Curious
"If you're new to crypto, we recommend starting with our early episodes where we break down the basics and give you a solid foundation to understand the crypto world. Join us as we explore the ever evolving world of cryptocurrency and educate ourselves along the way. Let's dive in together as we discover the exciting potential of crypto. In this week's episode, Craig and I are joined by Mark monfort, whose cofounder of the Oz DeFi association and not centralized. Mark is a staple in the crypto scene here in Australia with in depth knowledge across a wide range of industry topics and an all around nice guy who always has a smile on his face. So for me personally, if we're going to an event, this is the guy that I always hope to run into. So we're really pleased to have you here. Welcome, Mark. How are you going? Thanks for having me, jeez. I need a hype girl. I think you won the job that was an amazing intern to glad this is recorded. Mark is also proclaimed the busiest man in crypto. Australia. He's everywhere. Not even self proclaimed there. So yeah, it's crazy. 24 hours ain't enough. It is true though. Every time I jump on LinkedIn, there's something where you're going somewhere or you're doing something. So thank you so much for joining us. Okay, let's get into it, folks. So the biggest story over the last 7 days has undoubtedly been the next body shot to the crypto market. And I'm talking about ladies and gentlemen, silver gate. Silvergate is one of the most well-known crypto friendly banks and it seemingly capitulating under a mix of regulatory and market pressures this past week and undergoing what looks like a bank run of sorts. So what quick things off was a two week delay in its annual ten K SEC filing last Thursday and they cited a need for more time in assessing its finances. So still the gate stocks immediately tanked on this news, dropping 55% to around $6 50 per share. And JPMorgan analysts downgraded the silver Gates already down stocks from neutral to an underweight rating Craig. Yeah, so silver gate are huge. This is a big deal because they're pretty much quite unquote a crypto friendly bank that some of the biggest exchanges in market makers use that makes it easier for them to move funds in and out of the crypto ecosystem. But here's just a bit of an overview of what's happened since. So since then, coinbase tweeted that it can no longer facilitate payments using large dollar,
Crypto Banter
"silvergate" Discussed on Crypto Banter
"Let's look at this trendline for the first point of invalidation and then let's look at this low as the second part of invalidation, but other than that, I'm actually staying rather bullish. There is, of course, the flip side of this scenario, which is like we are in November. If DX collapsed, where we had this output training pattern and then we had this high low low, and then we broke down quite aggressively FTX rate candle. And we could be playing that scenario. And if we are playing that scenario, there is actually only one thing that could play that scenario. And that is a collapse of maybe binance, or maybe tether. But mainly binance, and there is a lot of binance fight happening at the moment. If the charts are to repeat the 2022 charts, then maybe this finance fed is preemptive. And there is one SEC X SEC commissioner, not commissioner, but enforcement agent, who says my take binance related criminal and civil prosecutions are actually imminent. So this is quite scary. He's saying it's imminent. We're going to dig into that story in a couple of seconds. It forms part of a much, much, much bigger picture, not everyone can see what's happening in this picture. I'm going to draw, I'm going to show you exactly what's happening. It's not as simplistic as it seems. It's not as disconnected as it seems. Actually, what's happening is it all started right here when you go into the Audi chart. And you see this big red candle. This big red candle over here is when silvergate bank had its collapse last week. And this silver gate bank collapse, I don't know if you remember, but all the exchanges basically abandoned silver gate and said, look, we can't be part of this. This is too dangerous. There's too much too much regulatory scrutiny too much, uncertainty, too much, too many liquidity issues. We can't be caught banking with a bank that's got liquidity issues because maybe our customers funds will actually stay. Stuck in this bank. So we're not really going to get involved. And so we saw all the big crypto exchanges actually pull out of silvergate bank last week. And one of the things that silvergate banks said in a statement last week is that standing along the lines of we are expecting a lot more regulatory scrutiny. That's what I say. The expecting a whole lot of regulatory scrutiny and they said that there is a chance that the bank will be less well capitalized than it needs to be to continue its operation. So that's the two. Signs that are happening. But if you dig a little deeper, what you will see is you will see a couple of other clues. So remember on the one hand, you've got this silver gate candle. Then you've got Bitcoin moving sideways and really not being able to gain any type of momentum up, even though the stock market is strong and the Dixie are strong. So what does that tell you?
Coin Journal
Bitcoin price prediction BTC outlook after Silvergate and Tether news
"11 a.m. Sunday March 5th, 2023. Bitcoin price prediction BTC outlook after silvergate and tether news. Bitcoin price outlook after this week's silvergate and tether news. BTC is hovering around 22,400 with key resistance near 23 K amid a potential technical breakout to why did he highs? The 20 K zone is a critical and psychological level for bulls. Bitcoin price remains constrained below 22,500 after posting a sharp decline on Friday following a combination. The post Bitcoin price prediction BTC outlook after silvergate and tether news appeared first on coin journal.
Coin Journal
Circle moves its USDC reserve deposits out of troubled Silvergate Bank
"10 a.m. Saturday March 4th, 2023. Circle moves its USD C reserve deposits out of troubled silvergate bank. Silvergate bank in a filing on Wednesday, said losses might leave it with less capital than it needs. The bank recently closed its SEN platform, which institutions used to move money to crypto exchanges. Coinbase, galaxy, and paxos have stopped accepting transfers via silvergate network. USD C stablecoin issuer circle has today announced that it has. The post circle moves its USD C reserve deposits out of troubled silvergate bank appeared first on coin journal.
Tech Path Crypto
"silvergate" Discussed on Tech Path Crypto
"Sometimes so buried and integrated in, many of these projects and customers may not even know that silvergate is the banking partner, hence they may not even know they're at risk. That's a bigger factor that plays into this. Here was tear ten K, he talks about silver Gates lost coinbase circle, paxos galaxy, CBOE, all rest in peace. So a big one for sure. Make sure to drop some questions in over on the side if you'd like to chat with me at the end. And of course, also smash the like button. It does help this video get some exposure out there. And hopefully help others kind of step in. Here was watch your guru just in. This is crypto dot com suspending USD deposits and withdrawals. Via silvergate. I don't understand this because, you know, crypto dot com continuously comes and then they come at me a lot on when I just say I'm just not, I just don't trust it. I'm sorry. My feeling based on interactions, things I've had. And I had this about a handful of projects out there and exchanges. And always push back. But why would they let something like this happen? If they're, you know, brilliant people don't let these things happen. You've got to make these moves in advance to not get your customers in these kind of positions where you've got USD deposits and withdrawals now all suspended with silvergate. So big issue happening there. There are core silver Gates warning all of its investors may not survive the year. Obviously, we saw more than a 30%. I'll show you the chart here in a second. But there's a few things here, bank initially posted a loss of almost, look at that, $919 million in losses. Additional losses will negatively impact the regulatory capital ratios of the company, wholly owns subsidiary. The problem is is that this sends a very interesting message, I think, to the rest of the banking industries. And that is that maybe crypto is not as financially sound and profitable as many had thought. And I think the scenario plays into banks who have made bad decisions and now are paying for it. These guys are not new to making bad decisions. They've done it all along. I mean, we've had this all the way back to the banking crisis of 2008. And you go further back into all back into the world of when we had free banking prior to the fed coming in and really restructuring out the banking system works. This is not new, guys. We get to see this every so often and it just so happens we're getting to record one currently. Silver Kate shares thank to our record low. Banks said it wouldn't be able to file its annual report. This is a big problem when resuming whether it can even be viable. So you've seen this massive downturn in terms of the overall stock price. And obviously, just the different strategies of companies that are built around this. There was Adam cockrum and talking a little bit more about the death spiral and zoom in on that. It's going to be rough for crypto. I don't think retail investors realize how much market maker money moved around quickly via SEN. And also how many crypto exchanges are banking with them. So this is a big one. SE and silvergate. So it's going to hit.
Bankless
"silvergate" Discussed on Bankless
"And so it was stated that silvergate sold additional debt securities to repay debts this year. And they have said that further losses would mean that the bank would be less than well capitalized is what they said. So this is one part of this is like, okay, banks take risk. That's what they do. That's the part of their business model. Crypto is risky. There's not that many banks in the crypto industry. Therefore, the few banks that do serve crypto bear the general risk of kind of the entire industry, we all know what happened with the insolvencies of 2022. And so that has impacted a large amount of silver Gates clients, which makes them unable to pay back their loans to silver gate, which means silvergate has to eat some losses. And then in addition to that, operation choke point has really reduced the interest in investing in silver gate or making silvergate a creditworthy bank. And so all of this has led up to this moment right now where silver stock tumbles 45% coinbase doesn't want to use silver gate out of an abundance of caution. And so this is one part kind of a cell phone out of the crypto industry. Then blown up because of operation choke point because of thanks Gary. They can't get, they can't get banks anywhere else, basically. And it's scary to the entire administration that seems to be involved in operation checkpoint and the stock is certainly taking a tumble. As you mentioned, silver gets stock as a result. The question is, where are crypto exchanges going to actually bank in the U.S.? There's operations. That we want. This is the bad breakfast. Yeah, this does not help liquidity inflows into crypto. And it cuts off a way for people to become more bankless. That's the bad news this week. The good news, though, David is good news from here on out. Good news from here on out. All right, we got through the worst of it. Meta mask is now in the unity store. David, do you know much about unity, the gaming platform? Yeah, it's a very well adopted, very high profile game engine that many of your favorite games if you are a gamer is built off of. Meta mask has released an SDK for incorporating meta mask into unity. What does that mean? Web three games, asset powered games, sign in with Ethereum in your unity game. Anything that you can think of that has to do with your private key on Ethereum into a unity game engine. So their topic of what that means is massive, but simply think of a more seamless injection of private keys into unity games in all of the positive second order effects that come with that. Did you know David there's 2.7 billion users in developers that use unity for a game or a set of games? Do you think two point did you mean 2.7 billion users who are playing with securities inside of their games right? Oh God, I hope not. Don't tell Gary. Well, we'll just DDoS, Gary, you know? 2.7 billion of us. So it was like everything's a security. It's like a court case. All of the gamers are playing with unregistered securities, Gary. Go get them. A court case for everyone. One by one. I can't wait to take all the 12 year olds on. One by one. Enjoy that. This is the unity asset store, David.
The Breakdown
"silvergate" Discussed on The Breakdown
"Part of the sky is falling. In that period rapidly decreasing prices led to protocol failures led to credit crunches led to credit crises led to institutional failures, led to further credit issues led to more institutional failures and so on. Since FTX failed, one of the key questions has been what other dominoes would follow. Genesis and DCG have been a key part of that question. Genesis halted withdrawals the week after FTX declared bankruptcy and parent company DCG has basically been negotiating with predators ever since. Now that story isn't fully done with a big $575 million DCG loan payment to genesis, technically coming due in May. However, the other big institution that has been under the spotlight is publicly traded bank silvergate. And today, silvergate is absolutely the main character. Yesterday they delayed their annual report triggering a big sell off in aftermarket trading, JPMorgan and others cut their rating of the stock, and then this morning, coinbase jumped off the sinking ship, announcing that they were moving their business to signature. As I write this silvergate stock is down 50% since yesterday, hitting its lowest level since its 2019 IPO. And the bank is quite literally now saying that it's examining its own viability. So today we're going to dig into not only why silvergate is crashing, but how it got to this point, and what its death spiral means for the industry. Let's start at the beginning. Silvergate bank is a medium sized crypto friendly bank based in California. For most of its 30 year history, silvergate was a tiny community bank focused on financing smaller real estate deals. It had only three branches and less than $1 billion in bank assets. In 2016, under the leadership of CEO Alan lane, the bank pivoted to providing banking services to crypto firms. Ben Reynolds silvergate president, who is hired to oversee this change in business strategy said, we need to deposit an Allen started seeing that companies like coinbase were getting kicked out of banks. So the idea was, if we can bank coinbase, we can find deposits. Allen went to the Federal Reserve and said we want to provide basic banking services to Bitcoin companies and they said okay. Over the next 6 years, silvergate downsized its existing business banking and real estate teams to lean heavily into crypto. In 2016, the bank had only 20 crypto clients, including paxos and bit fury, but this number grew to over 1000. This rapid expansion in dealing with the early crypto industry came with a large increase in compliance risk and overhead. According to anonymous sources speaking with Financial Times, silvergate had to hire twice as many compliance staff as comparable banks of its size. Waiting times for compliance checks on new customers ballooned out to 6 months. One of FT's sources said quote, when they got into it, crypto was this little new thing, and I think they didn't realize it would take off as fast as it did. So then they put all their chips in that direction, it ran away from them, it got very big very quickly. Now part of the reason that silvergate were able to achieve such a prominent position in the crypto ecosystem was the launch of their silvergate exchange network or sen in 2017. Said enabled crypto firms to immediately transfer U.S. dollars to other account holders at silvergate, 24 hours a day, every day of the year. Funds would be cleared near instantly and could be used immediately. While this feature might not have an obvious use case for the average retail trader, for large crypto funds this opened up the possibility of conducting arbitrage trades across exchanges at a much faster speed, while also allowing funds held on exchanges to be topped up after hours or on weekends. In short, it was a feature that kind of matched the way that crypto actually traded versus the way the traditional markets traded. Sen saw a huge amount of success with silvergate claiming in late 2019 that more than 75% of the total addressable digital asset market held accounts with the bank. Volumes as you would expect exploded in 2021 with send clearing more than $150 billion in each quarter that year coming close to clearing $250 billion in Q two at the height of the bull run. The volume in Q one of that year represented an 84% increase from levels at the end of 2020. The growing use of sand was a paradigm shift for the industry. Exchanges had gone from having difficulty obtaining any banking services whatsoever to having an instant settlement network available for off chain funds. In a testimonial that has since been scrubbed from silver Gates promotional material, Sam bankman fried FTX said, quote, life is a crypto firm can be divided up into before silvergate and after silvergate. It's hard to overstate how much it revolutionized banking for blockchain companies. Now, it doesn't take a risk management specialist to understand that if a huge part of your business is the crypto industry, then upheavals in that industry could be particularly painful for your business. The recent run of problems at silvergate indeed started in November following the collapse of FTX. At the time, FTX and associated crypto lending firm BlockFi represented around 10% of silver Gates deposits. According to bankruptcy filings, FTX held around 20 different accounts under a range of different company names. What followed was a savage bank run. Concern about silvergate solvency, customers from throughout the crypto industry, scrambled to withdraw deposits. When the dust settled, so forget had seen an $8.1 billion drawdown in deposits, around 70% of the bank's deposit base. Surrogates reserves were mostly comprised of so called safe assets, like U.S. government and municipal bonds. Even so, the bank recorded $718 million in losses as they liquidated their reserves, showing a total loss of more than 1 billion in Q four of last year. Shortly afterwards, details surfaced that silvergate had tapped into emergency liquidity via a loan for $4.3 billion from the federal home loan bank of San Francisco. These sort of loans are relatively standard in the banking industry to prevent the fire sale of safe assets, but the reputational damage was massive. This move was easily portrayed as silvergate using government backed money to service withdrawals during the bank run. This is even though the FHLB system is entirely privately funded and has never actually needed to be backstopped by government funds in its 90 year history. The issue now appears to be that although silvergate survived the bank run, its deposits have not returned. Customers appear to be less than enthusiastic about taking risks with silvergate. Block tower CIO, Ari David Paul said, everyone was scared. Everyone was primed to fear counterparty risk. It didn't surprise me that you have that massive flight of capital out of silvergate. Everybody like myself is feeling extra conservative in how we think about risks. Now, continuing to understand what's been going on at silvergate, although much of the outward criticism has been focused on their handling of the bank run, more recent concerns about their internal processes and compliance have surfaced. Veteran short seller Mark cajones was loud and early in his airing of a short case for silvergate back in November. He suggested that the banks lacks procedures had left them unaware of money laundering and bank fraud conducted by their clients at best or complicity in the activity at worst. Throughout the last month, cahoot is another short sellers have written to notify silvergate auditors and accountants of the issues as they see them. On February 6th, short seller James Gibson wrote to silver Gates auditor, we write to alert you to the risks that customers of silvergate have used the entity to engage in substantial money laundering and that management of silvergate has misrepresented its business operations, potentially in violation of law and auditing standards. In the aftermath of the FTX collapse, speculation began to surface that customers had been directed to deposit funds intended for the exchange into bank accounts operated by Alameda research. Allegations surrounding this conduct were later leveled by the Justice Department with the recent additional allegation that FTX had opened an account in the name of north dimension, which was held out to be an electronics company with no connection to FTX or Alameda. The DoJ did not mention the bank which operated these accounts by name, however Bloomberg reporting this week cited an anonymous source who said that the bank was silvergate. While the FTX bankruptcy case listed two accounts held in the name of north dimension at silvergate. On top of that, last month, Reuters reported that officers at the international binance exchange had accessed bank accounts held its overgate by binance U.S.. The reporting stated that former binance U.S. CEO Catherine Coley had questioned the bank account activity and could not get a straight answer. Shortly afterwards, she resigned and has not been publicly heard from since. In total, around 400 million was moved from binance U.S. account to a trading firm called merit peak in the first quarter of 2021. In June that year, silvergate cut off binance international as a customer, which meant the exchange could no longer perform U.S. dollar wire transfers. When a bipartisan group of senators wrote to demand answers from silvergate in December, they said, quote, your banks had been in the transfer of FTX customer funds to Alameda, reveals what appears to be an egregious failure of your bank's responsibility to monitor for and report suspicious financial activity carried out by its clients. For their part, so gate has maintained innocence surrounding this activity. In response to the letter from U.S. lawmakers silvergate said, like many others, silvergate was the victim of FTX and Alameda research's apparent misuse of customer assets, and other lapses of judgment. And we believe our full cooperation will help set the record straight about our role in the digital asset ecosystem. So that's where things were coming into this week. But then it got even worse for the already beleaguered bank. Join coin desks can census 20
CoinDesk Podcast Network
"silvergate" Discussed on CoinDesk Podcast Network
"It says that it switched from silvergate out of an abundance of caution. Quote unquote, in a tweet, adding that it has minimal exposure to silver gate. The stablecoin issuer paxos has also jumped ship from silvergate discontinuing transfers and wires to its account with the crypto friendly bank. And as a result of all of this, it's losing, well, traction. So shares of silvergate plunged 45% early Thursday on questions about its survival due to losses and numerous regulatory issues that have arisen. And it was downgraded to underweight from neutral by JPMorgan. It's had problems just with having a lot of back and forth between short sellers and then of course all of the FTX collapse. So this is sort of a sad thing for crypto in general, really because it has been sort of a mainstay in the industry. I just wanted to, well, agree that this is a real bummer for crypto. And I think that one way to think about it is silvergate suffering a bit of an innovator's dilemma fallout here. They were among the first to get involved in the space. And they did see some benefit from it, but now they're now they're catching the downside. I'm looking at their stock chart and one thing that I think is worth pointing out is that I'm not going to get this exactly right. I think it looks like the IPO Ed in about 2019 or at least that was when they first listed by whatever means. And we're only just now getting back to being a little bit below this is a shorter term chart right now. But if you look at the three year chart, we're only just now getting back to where their stock is a little bit below their IPO price, which obviously stinks, but they enjoyed a lot of upside during the crypto bubble. And so, you know, it's the double edged sword here. The thing about coinbase and I forget was it paxos turning away from them is really unfortunate, but it's also part of the cascading failure risk of being involved in this coinbase doesn't want to be on silvergate anymore if they're getting a bad name, even though they're seemingly only getting a bad name because of other crypto companies failing. So it seems like a bit of a negative spiral that hopefully they pull out of, but we'll see Zach. Yeah, the thing that stood out to me is like that regulatory filing, there was a fresh filing that said there was regulatory inquiries and investigations that the company was looking into that will maybe dictate the future health of that company. I think the market was really quite spooked by that. And it really does sort of go back to that joint statement from a bunch of U.S. banking regulators. I think it was an early January that said that banks really need to be wary of the risks inherent in working and serving crypto firms. And you kind of see this sort of rearing its Ellie head. I think silvergate has sort of become kind of ensnared in what I think is a push from the OCC, the fed, and another agency said, hey, you know what, like banking the crypto sector is bad, watch out. And I think what's alluded to in this recent filing is that those investigations, those inquiries are landing at silvergate store, right? This has been a company, as you mentioned, Christie, that's been serving the crypto sector for a number of years now. And here, again, in the wake of some of the FTX implosion, regulators in the U.S. are taking it upon themselves to look more deeply at some of these banking partners and providers. Obviously you hear sort of operation choke .2 and some fears and concerns that maybe the regulatory apparatus in the U.S. is the best way to sort of stifle crypto innovation by targeting the banks that are already highly federally regulated. And this may be coming to pass with silvergate. In addition to some of its recent business stumbles, the regulatory sort of finally aspect that came out, I think it was yesterday. Definitely spoke to me caught my eye. Yeah, I would just quickly point out that there is some disagreement about the seriousness of this operation choke .2. That is not any kind of official narrative. That's something that people are projecting a little bit and might or might not actually come all the way down the pike. So that's worth coming out. All right, let's change gears. Let's talk about something, maybe a bit more pleasant for the crypto natives in the crowd. Let's talk about coin desk and art blocks. They're teaming up on a cool thing related to the consensus conference, which is upcoming in April in Texas and they're releasing a thing called microcosms. It's a way supercharge in person events with NFT ticketing and more here to talk about it is art block chief marketing officer Hannah Siegel Gardner and have coined that studios Sam you and hey there. How's it going? Good to see you. Awesome. So Hannah, give me the pitch. What is microcosms? What's the point? What is this going to enable for conference attendees consensus and potentially more down the road? Well, I'm going to have to quickly pass this ever to Sam because this is really his brainchild. Artbox engine, which is part of our blocks powering the generative drop that is about to happen. I think in 45 minutes. But really, this is Sam's dream that we've been able to make him alive. Damn. What's the point of this thing? Why are we getting away from traditional ticketing models? Great question. So the premise that we're working with is that ticketing models are a bit broken. I sort of blame ticketmaster as a lot of people do. But you know, in 2010, they merged with live nation, created a real monopoly. I found a study that said last year over the top 40 concerts, 28% of the ticket price was fees. You know, we know that that experience itself is kind of getting worse and worse for the consumer, waiting in lines, the resale market, all of that stuff. And so we sort of believe that ticketing and the blockchain go really well together because you can reward loyalty instead of making loyalty kind of this extractive opportunity. And that's why we actually came up with microcosms, which is the idea that you can own this amazing generative piece of art that will let Hannah talk about what generative is in a second. But that by owning it, we then sort of AirDrop you all of this additional value that really makes the most for the conference itself. So not only do you get three years of passes to consensus, at a much cheaper price than you would get normally for humming, but we have things like you can get a booth on the show floor or a speaking slot at consensus. You can get meetings with VCs and media buy on coin desk dot com. All
The Crypto Overnighter
"silvergate" Discussed on The Crypto Overnighter
"Other crypto related services. A group of U.S. senators wrote a letter to silvergate capital, asking for information about FTX collapse. They say silvergate didn't fully answer their previous questions about handling user funds. Silvergate claimed it couldn't share information due to confidentiality, but the senators don't accept that. The senators wrote a letter, saying that they need more information to understand silver Gates involvement in nefty axis collapse. They say silvergate used the federal home loan bank as a lender, so it's important to know what happened. They asked silvergate for answers in a previous letter, but say the firm didn't give all the important information needed to understand its role in the FTX situation, including if it handled user assets correctly. So what happened is, after FTX is collapse, senators Warren and White House asked the Justice Department to take a look at what happened with FTX. They asked the DoJ to consider charging folks. So in their letter, they gave silvergate until February 13th to respond back, including reporting on their due diligence practices. Shares of silvergate were up 4% in early trading on Tuesday, which sounds great until you realize they're down 88% over the last year. Speaking of FTX, shockwaves from the exchanges collapse are still being felt as far off as Kazakhstan. Now what's happening is Kazakhstan's crypto regulator is proposing new requirements for digital asset exchanges, and these changes include the segregation of customer assets and risk mitigation. They're looking to the example of FTX poor governance as their reasoning. The Astana financial services authority put out their draft enhancements to the digital asset trading facility, crypto exchange licensing framework. They were submitted for public comment on Monday. This was after afsa said there existing rules landscape had revealed contradictions, inefficient provisions, and uncertain definitions. And make no mistake, their focus is on FTX failure, especially the new regulations on segregating customer's funds. The tangled financials between FTX and Alameda won't be allowed under Kazakhstan's new rules. Assets proposed changes also addressed liquidity risk, proper disclosure, and risk of arbitrage. In things have really picked up crypto wise for Kazakhstan. After China put the kibosh on crypto, Kazakhstan took over the second slot as far as Bitcoin hashrate production goes. It got so bad they had to redo the electricity rules to accommodate the influx of new miners. Binance
The Crypto Overnighter
"silvergate" Discussed on The Crypto Overnighter
"Here, encrypted, it's 10 p.m. Pacific time, my name is nicodemus and welcome back to the crypto overnighter, where we take a nightly look at the crypto NFT and metaverse space, and keep in mind nothing in this show should ever be considered financial advice. Last night, we spoke for a bit about maple finance and some of the difficulties that they were running into. And I wanted to give you a bit of an update. Nexus mutual is a peer to peer insurance alternative. And they are expecting to take a loss on their investment in a credit pool on maple finance. Now, listeners from last night will remember that maple finance is a decentralized lending platform. And now the company warned about a potential loss of 2461 eth, which is around $3 million due to orthogonal trading default. Nexus has started to withdraw all of their funds from the affected pool, which represents about 1.6% of their assets. In August, nexus deposited over 15,000 eth worth around $19.3 million. That went into the credit pool on maple finance following a community vote. However, more of nexus funds are potentially at risk due to orthogonal trading default debt and oros global's failure to repay alone. Now nexus mutual is warning that it may take a loss on its investment in the credit pool on maple finance. What that means is that the potential losses due to orthogonal trading default on its debt and maples credit dashboard shows that the defaulted debt represents 56% of the outstanding debt on the rapid Ethereum credit pool. At present, there is only $3.1 million in cash deposits that are not tied up in loans. That limits nexus ability to withdraw funds. Maple has a ten day waiting period before depositors can withdraw capital. This news comes as the collapse of the crypto exchange FTX continues to impact DeFi lending protocols. Have you been paying attention to silvergate bank because something's going on there? And now, silvergate has always been kind of interesting from a crypto point of view. One interesting thing that happened is when they closed their door on the Libra, DM stablecoin project, they bought the intellectual property and said that they intended to create a coin using those assets. Well, things started going downhill for them on Monday morning as the bank's shares plummeted 3%. What happened was that Morgan Stanley downgraded its rating on silvergate capital to underweight. That's due to the risks arising from the bankruptcy of the crypto exchange FTX. The banks analysts believe that silvergate faces significant uncertainty about deposit flows in the near term. They estimate that the bank's digital deposits have fallen in about 60% so far in the fourth quarter. The demise of FTX could also lead to litigation and headline risk across the crypto industry. Allen lane is silver bank capital CEO. He published a public letter that said that the bank conducted quote extensive due diligence on FTX and its related entities, including Alameda research. He added that the bank followed all of the relevant regulatory procedures and investigated any potential untoward activity. Lane said that speculation and misinformation being spread by short sellers and other opportunists is trying to capitalize on the market uncertainty. Silvergate disclosed one month ago that FTX deposits made up nearly 10% of their $11.9 billion in deposits from digital asset customers. However, the bank does not appear to be a creditor to FTX. Now, lane said that the bank has a resilient balance sheet and ample liquidity. He added that the lender carries cash and securities in excess of their digital asset related deposit liabilities. Silvergate stock is down 53% over the last month and was little changed in after hour trade on Monday. Well, since then, U.S. Congress has gotten involved. Three U.S. senators, Elizabeth Warren, John Kennedy and roger Marshall have written to silvergate. They want answers about its supposed role in facilitating transfers between the exchange FTX and Alameda research. The senators letter come after allegations were made that sbf made large transfers of customer funds from the exchange to Alameda research. FTX and other companies reportedly held around 20 accounts at silvergate, according to a bankruptcy filing. The senators letter said that there were, quote, reports that mister bankman freed secretly transferred some $10 billion of customer funds to his trading vehicle automated research to fund risky bets, violating both U.S. securities laws and FTX owned terms of service. They also said that they were concerned about surrogates role in these activities because of reports suggesting that silvergate facilitated the transfer of FTX customer funds to Alameda. Shares were down another 6.15% and have touched a new 52 week low in Tuesday morning trade, adding to their roughly 50% decline since the FTX collapse. Silvergate has issued a statement saying that it was quote the victim of FTX and Alameda research's apparent misuse of customer assets. They said that they believe their full cooperation will help set the record straight. Now the bank has until December 19th to officially respond to the senators. SPF has reportedly hired Mark Cohen, a former federal prosecutor as his defense attorney. His spokesperson said the former CEO has retained Cohen amid a flurry of civil litigation from investors in the crypto exchange and investigations by U.S. lawmakers and regulators. Now Cohen is a cofounder of the law firm Cohen and gresser and was a former assistant U.S. attorney for the eastern district of New York. He also worked on the defense team for Ghislaine Maxwell. Wait, didn't she get convicted? Anyway, FTX group filed for bankruptcy under chapter 11 in the district of Delaware on November 11th. This was following a reported liquidity crunch in which the firm claimed billions in leverage, making it unable to meet withdrawal demands. Filing in bankruptcy court suggested FTX could be accountable to more than 1 million creditors. After the company's collapse, SPF has made several media appearances and has spoken to reporters many times. Despite criticism from some in the crypto space. The former CEO has apologized for his role in the exchanges downfall. He said that he plans to make it up to affected team members, but has not yet offered a concrete plan to compensate investors. John ray became the exchanges CEO in November. Now, one defender SPF doesn't have to hire is Kevin O'Leary. Because it was in an interview with Yahoo finance today that Shark Tank's mister wonderful called for calm following FTX is collapse. O'Leary stated that the exchanges former CEO should be considered innocent and less evidence emerges that he committed fraud. He called for FTX to be audited to reveal where they exchange his money went so that investors can get their funds back. On November 30th and December 1st, SPF took several interviews in which he claimed that he was not guilty of fraud, which led to backlash within the crypto community. However, O'Leary defended him in a new interview, saying that he is quote innocent until proven guilty. O'Leary explained quote, I am of the ilk, and of the group of people that says, you're innocent until proven guilty. That's what I believe, and I want the facts. And so if you tell me that you didn't, you did or didn't do something, I'm going to believe you until I find out it's a falsehood.
Tech Path Crypto
"silvergate" Discussed on Tech Path Crypto
"More pressure on the markets, getting into the institutional side of things and really taking a look deeper into whether or not this contagion will continue to seep out into the traditional markets as well as the markets that support a lot of the crypto scenes. So we're going to dive into my name is Paul bearer, welcome back into tech path today. I want to get into it today around some institutional news as well as many other things. We'll talk a little bit about Gemini. We'll get into some things with a variety of different exchanges. Talk a little bit about silvergate banks. As you guys probably have seen and heard around silvergate in terms of their support level, we'll do all that, do some breakdowns for you, but I do want to thank our sponsor today. That is bybit. Jump over to bybit, get into the next level trading. We've got some pretty cool things going on during the World Cup. They've got a crypto cup kick-off. You can grab a share of 5 million 500,000 USD T in their prize pool. So if you guys are interested in going in and doing some trades, the way I use bybit is shorting. It's a great platform for short trading and it's one of those that I think is now starting to become maybe one of the most favorite for some of the traders that are out there. So check them out, use our link below and also you can get zero spot trading fees right now as well. All right, let's get into a couple of things here. Speaking of bybit, this came over from Wu blockchain showing huobi and bybit announced their cold wallet reserves at present among the major exchanges only gate IO, max C, and baguette were the ones who have not submitted. So this proof of reserve model, which really was kind of fostered by what was happening with CZ. It's now in play. I mean, we're starting to see this. You can kind of see binance coming into there all USD setting N 64 billion right there, BTC. E, the reserves, USD T reserves, USD C reserves, and then BUSD reserves. So a good lineup there, you see bitfinex in there, not completely in there, but then you get okay X, you will be coming in and then KuCoin, and then, of course, crypto dot com and bybit also. So more data coming in, which is good, I think, for the industry in general. No, I'm not defeated.