Ripple (XRP) CEO Brad Garlinghouse felt compelled on March 12 to make some statements regarding the bankruptcy of Silicon Valley Bank and its potential impact on his business.
“Ripple had some exposure to SVB. It was a banking partner that kept part of our cash position. Fortunately, we do not expect any problems related to our day-to-day operations and we have held the majority of our US dollars within a wide network of banking partners.”
Setting the record straight on SVB Qs:
Ripple had some exposure to SVB – it was a banking partner, and held some of our cash balance. Fortunately, we expect NO disruption to our day-to-day business, and already held a majority of our USD w/ a broader network of bank partners.
— Brad Garlinghouse (@bgarlinghouse) March 12, 2023
Silicon Valley Bank en Ripple
What Garlinghouse does not share in the message is how much money is involved. In that respect, we have to believe him that it is an amount that does not have a huge impact on Ripple’s business. The XRP community has responded positively to the news as usual.
I never doubted you or @Ripple to have taken proper risk management. 💯😎 Thank you for the statement.
— EarthAngel.XRP☀️ (@EarthAngel_Xrp) March 12, 2023
“I never doubted that you or Ripple had poor risk management. Thank you for the statement,” said EathAngel.XRP in response to Garlinghouse. Chief Technology Officer, David Schwartz promised on March 11 to clarify the impact of Silicon Valley Bank’s collapse on Ripple soon.
It is not entirely clear whether this message from Garlinghouse was exactly what Schwartz had in mind for this. On the other hand, he is the head of the blockchain department and Garlinghouse is the CEO and who decides when it comes to such matters.
Schwartz doesn’t understand it
What Schwartz doesn’t understand is that a bank run can make a bank non-solvent. “I don’t understand how a bank run can cause a bank to become insolvent. If the bank was solvent before that, it means that the bank has more assets than liabilities,” said Schwartz.
These are pretty strange statements for someone who’s been in the industry, but Schwartz is probably not a Bitcoiner. They generally know that a bank does not keep your balances neatly in a safe, but invests in all kinds of assets.
If everyone then comes at the same time to request their money back, a bank cannot always comply and must first sell assets. Hardly any bank would be able to handle it if everyone suddenly wanted to withdraw their funds.