• The California Department of Financial Protection and Innovation closed Silicon Valley Bank (SVB) on March 10.
• SVB had $209 billion of assets, making it the second-largest U.S. bank failure in history and the largest since the 2008 financial crisis.
• Crypto companies Circle and BlockFi may have exposure to SVB funds, though this is unclear.
Silicon Valley Bank Closure
The Federal Deposit Insurance Corporation (FDIC) announced on March 10 that the California Department of Financial Protection and Innovation had closed Silicon Valley Bank (SVB). This was prompted by an $1.8 billion loss from a sale proposal, which led to a 60% drop in share value within a day and subsequent bank run. This makes SVB one of the largest bank failures in US history with $209 billion of assets at risk.
Crypto Exposure to Silicon Valley Bank
Though not directly related to the crypto industry, some crypto companies may have exposure to silicon valley bank funds. Circle held funds with various banks including SVB as recently as January, though it has since moved some of its reserves between banks so it is unclear how much money is currently held with SVB specifically. Similarly, BlockFi is reported to hold $227 million with SVB though these funds are unprotected according to a US Trustee filing on March 10th .
The closure of Silicon Valley Bank has wide-reaching implications for both traditional finance and crypto markets alike due to its size; not just because of potential exposure from crypto companies such as Circle or BlockFi but also larger traditional institutions who have invested heavily in financing businesses under the umbrella of SVB Financial Group.
Questions have been raised over executive involvement leading up to this event; CEO Gregory Becker, CFO Daniel Beck and CMO Michelle Draper collectively sold millions worth of stock weeks before the collapse despite continued success being reported across other divisions within the company such as Wealth Management Services or Commercial Banking Services earlier this year..
In conclusion, The FDIC has designated itself as receiver for SVB and eligible customers will be able access insured deposits by March 13th however It remains yet unclear what impact closure will ultimately have on both traditional finance and crypto markets alike due to widespread implications from such a large scale banking failure .