Cetoex News – Ripple’s Chief Technology Officer, David Schwartz, has recently dropped his two cents on the collapse of Silicon Valley Bank. With multiple banks collapsing one by one, it has become difficult for almost anyone not to notice it over the headlines.

Schwartz has recently taken to Twitter to comment on some of his thoughts on the Silicon Valley Bank.

Ripple CTO highlights the anonymity of SVB’s insolvency reason

“Nothing about SVB’s KYC policies or who they extended credit to seems to have anything whatsoever to do with how they became insolvent,” Schwartz said.

He also mentioned that anyone who keeps uninsured funds on deposit with an insolvent bank is not a bright person. Ripple is going through its fair share of trouble with the SEC lawsuit dragging on. In a recent statement, Ripple’s Brad Garlinghouse also addressed the fact that the cryptocurrency firm had a tiny exposure to Silicon Valley Bank.

The collapse of some of the largest cryptocurrency-friendly banks had also raised the question as to whether this is a pre-planned attack against cryptocurrencies. However, despite all the banking chaos, the cryptocurrency market is putting on a positive show. Bitcoin has breached the $28,000 level with over 15% gains in the last seven days, according to CoinMarketCap data.

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Cetoex News – Speaking on Monday, the White House stated that President Joe Biden has confidence in Federal Reserve Chair Jerome Powell. Subsequently, the endorsement has arrived following the Fed’s most recent action in protecting depositors affected by the Silicon Valley Bank closure.

The country’s economic status has experienced a tumultuous two years, as the fights against inflation and an impending bank crisis have called its leadership into question. Conversely, the United States president has seemingly endorsed the current chair.

President Endorses Federal Reserve Chair

The financial sector of the US has seen a rather difficult 2023 thus far. Following a year of interest rate hikes to combat growing inflation, the banking industry has seen massive blows in the past few weeks. Moreover, as a crisis looms, there is growing concern about the safeguards to protect depositors in the event of a bank run.

Now, amidst the concern and pain, the White House has stated that President Joe Biden has maintained confidence in Fed Chair Jerome Powell. Additionally, the endorsement has arrived following a controversial bailout of depositors of Silicon Valley Bank that took place following its failure into receivership at the conclusion of last week.

Market Watch reported the White House statement from press secretary Karine Jean-Pierre. When asked if recent events threaten the Fed chief’s position, Jean-Pierre stated the contrary. Specifically remarking, “No, not at all. The president has confidence in Jerome Powell.”

The Donald Trump-appointed chair has undoubtedly had a difficult few years as the head of the Federal Reserve. Combatting inflation and protecting from a recessionary state for the country has been the chief task of the agency. Now, despite the concerning bailout, the president has shown where he stands on the job Powell has done.

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Cetoex News – Following the closure of Silicon Valley Bank last week, First Republic has seen its stock crash to an all-time low, according to Forbes. Specifically, the report noted shares plummeted another 30% on Thursday, as the California-based bank is “weighing a sale.”

The report notes that the stock plummeted to $22 on Thursday morning before trading was halted on the New York Stock Exchange. Moreover, the drop signifies, “its lowest share price since going public in 2010,” according to Forbes.

First Republic Next to Fall?

The past few weeks have induced new panic in the financial sector, as several US banks have collapsed. Specifically, Silicon Valley Bank and Signature bank were closed by regulators on Sunday. The Federal Reserve announced a ballot procedure to protect depositors of the failed bank.

Per their website, First Republic is a top-25 bank in the US by asset size. They manage $212 billion in assets with $174 billion in deposits as of the end of 2022.

A banking crisis could continue, as First Republic stock has crashed to an all-time low, according to Forbes. Specifically, the report noted that shares for the California-based bank fell 30% on Thursday, reading at $22 before trading was halted on the New York Stock Exchange.

Concerningly, Forbes notes that First Republic shares are down an astronomic 81% since last Wednesday. Subsequently, equating to “by far the largest drop of any S&P 500 constitute in the period even as the index dropped 3% while other bank stocks crashed.”

Additionally, the report notes that the dropping price is connected to investor concerns. Again, the report notes that worry is seeding in “over the company’s future,” following the closure of SVB and Signature Bank. Conversely, First Republic noted on Sunday that it “secured $70 billion in further liquidity from the Federal Reserve.” However, it didn’t keep S&P Global Ratings and Fitch Ratings from lowering the bank’s rating to junk last week.

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Cetoex News – Signature Bank was the third victim of the back-to-back bank collapses recently. The year 2023 has been ablaze with headlines about the unexpected shutdowns of some of the banking industry’s titans. The likes of Silvergate Bank, Silicon Valley Bank, and Signature Bank have all bitten the dust. These three financial giants share a common characteristic: they are all known for their support of cryptocurrency businesses.

Barney Frank, a board member of the Signature Bank, earlier stated that the action was a very strong “anti-crypto message” by the authorities. Now, according to the latest news shared by two anonymous sources with Reuters, the Federal Deposit Insurance Corporation (FDIC) has asked the buyers of Signature Bank to stop doing business with cryptocurrency firms.

Is Signature Bank and other shutdowns part of an anti-crypto plan?

The reports, if proven true, will confirm the fact that the regulators brought down the bank as a part of their anti-crypto message. Frank’s earlier statement was dismissed by the New York Department of Financial Services.

According to the Reuters report, bidders or potential buyers were asked to cut their ties with cryptocurrency businesses. The regulators’ scrutiny tightened after the collapse of FTX and reached its peak in February. However, amidst all the turmoil, cryptocurrencies exhibited a positive run.

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Cetoex News – Following its closure last week, Silicon Valley Bank has been sued by shareholders for fraud, according to Bloomberg. Moreover, the sudden and unexpected collapse of the financial institution represents the largest bank failure since the 2008 financial crisis.

The weekend saw the Federal Reserve announce its intention to aid uninsured depositors at the now-closed bank. Conversely, CNBC reports that at the time of closing, Silicon Valley Bank has nearly $16 billion in unrealized losses.

SVB Sued for Fraud

The collapse of Silicon Valley Banks remains among the most concerning developments in the financial sector in years. Seemingly out of nowhere, the financial institution collapsed in a matter of a week. Thus, spiraling the public in fear of a bank run, and wreaking havoc on bank stocks the following Monday.

Now, Silicon Valley Bank is being sued by shareholders for fraud according to a Bloomberg report. Specifically, the lawsuit is regarding accusations of “mismanaging events that led to its collapse.” Moreover, Bloomberg notes the lawsuit is the “first of what will likely be many securities-fraud lawsuits,” directed at SVB.

Reports began to surface mid-last week, as the bank attempted to raise the capital needed to ensure its survival. Subsequently, it sought a potential sale in hopes of salvaging itself. Conversely, the effort proved ineffective, and the bank was sent into receivership on Friday, as California regulators announced the bank had been closed.

CNBC reports that the Silicon Valley bank maintained nearly $16 billion in unrealized losses. Similarly, reports have signified that trend in US banks potentially proving to be an issue in the near future. Currently, it is unknown if those losses have played a part in the now impending lawsuit.

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