Last week, Silicon Valley Bank (SVB) ran into trouble. Until recently, the bank was one of the largest banks in the United States, but after a bank run, the bank had to close its doors. However, according to various sources, there is more going on and major mistakes have been made behind the scenes. On Monday it was announced that shareholders are going to court to sue the bank.
Silicon Valley Bank parent, CEO, CFO are sued by shareholders for fraud https://t.co/EAF3S4uiSP pic.twitter.com/rdnfG619xj
— Reuters (@Reuters) March 13, 2023
SVB shareholders are going to court
SVB bank was already in the crypto news because of the ‘depeg,’ or decoupling, of the USD Coin (USDC). The stablecoin had deposited $3 billion in reserves with the bank. The USDC has now restored its link with the dollar.
According to shareholders of SVB, the bank and in particular CEO Greg Becker and CFO Daniel Beck withheld information. They would have been aware that the bank was “very vulnerable” to a bank run.
“[Silicon Valley Bank] withheld information about the effects of rising interest rates by the Federal Reserve. They knew this had the potential to cause irreparable damage to the company.”
Silicon Valley Bank is one of three crypto banks that collapsed last week. In addition to SVB, Silvergate Bank and Signature Bank also closed their doors. The three institutions were three of the few traditional financial entities that provided liquidity to the crypto industry. The disappearance of the three banks has raised concerns about the potential lack of liquidity for the crypto sector, says Scott Melker:
“Silvergate, Silicon Valley and Signature are all closed. Customers are compensated, but there is really no one left to bank crypto companies in the US.”
Next bull run comes from Asia?
According to some is the closure of the three banks the umpteenth effect of the hostile attitude that US authorities have towards crypto. A few weeks ago, co-founder of exchange Gemini, Cameron Winklevoss, already pointed this out. He therefore expects the next crypto bull run to come from Asia.
Governments in Asia are a lot more positive about crypto. Hong Kong even recently expressed its ambition to become a crypto hub. New pro-crypto laws in the city-state have already seen major financial institutions from the region move to Hong Kong to offer crypto services.