8 ms·

Silvergate Bank to begin voluntary liquidation

102 points by pg_bot 4y ago

the_mitsuhiko 4y ago
Necessary context: Silvergate Bank was a major (by crypto standards) bank underpinning crypto companies. https://en.wikipedia.org/wiki/Silvergate_Bank https://en.wikipedia.org/wiki/Silvergate_Bank
- Aloha 4y ago
  Yeah, I was going off to link something similar. I was lost as to relevance. https://www.cnbc.com/2023/03/08/silvergate-shutting-down-operations-and-liquidating-bank.html https://www.cnbc.com/2023/03/08/silvergate-shutting-down-ope...
- rippercushions 4y ago
  More to the point, Silvergate was one of exactly two banks serving crypto companies in the US. The other, Signature Bank, is also under a lot of regulatory pressure and it has already cut off eg. Binance and Kraken.
  - yieldcrv 4y ago
    There will be other banks and onramps. There was a time before those two banks. And there are many more institutions open to the business now.
    - shanusmagnus 4y ago
      What about recent events would suggest more institutions wanting to get a piece of this action? I'm not being snarky, I'm trying to figure out where banking is going to come from now. Cobbled together small players, is that what it looks like?
      - yieldcrv 4y ago
        Plenty of banks want billions of dollars of business. Smaller banks jump at 100 million of deposits here and there for some niche market. The properly run crypto organizations are still banked fine, USDC - a stablecoin that isn't considered controversial - has $40bn on deposit at BNY Mellon. There are also many financial institutions under state charters and other concoctions that are or seek to operate better for the crypto industry. And crypto organizations have undergone more serious stress tests and banking isolation before. Silvergate's stress came from holding normal super boring bonds and needing to liquidate those, it needed to liquidate because of the mismanaged crypto organizations, but its ability to liquidate came from its own portfolio choices during a coincidental macroeconomic environment and not crypto.
    - lmm 4y ago
      > And there are many more institutions open to the business now. Is that really true? I got the impression the cryptocurrency industry was shrinking these days, with lots of companies that had previously announced involvement now exiting.
    - orangepurple 4y ago
      Not in the United States. Too much regulatory pressure right now.
LatteLazy 4y ago
This is a real pity.
- elkos 4y ago
  How so?
  - Scoundreller 4y ago
    My guess is the loss of a crypto on/off-ramp in USA.
    - deleted 4y ago
      [deleted]
  - LatteLazy 4y ago
    They provide (provided) good quality, legal, regulated, transparent services to a market that often lacks all those things. They were a small company just trying to "get by" and they worked hard to get into a good position. Now they've been killed by regulators both under and over regulating them. They're basically collateral damage to congress refusing to do it's job...
- madballster 4y ago
  Why - unless you're being sarcastic? Looks to me like the system is working Early warning system pushed the bank to unwind positions before hurting depositors. Regulation appears to be working well, for once.
elektor 4y ago
It's interesting to see how quickly the public interest (and money!) has shifted from cryptocurrency to AI.
- AceJohnny2 4y ago
  Heh, cstross even has a "conspiracy" theory about that sudden shift: https://www.antipope.org/charlie/blog-static/2023/02/place-your-bets.html https://www.antipope.org/charlie/blog-static/2023/02/place-y... (Which I don't buy)
  - elkos 4y ago
    There are some pretty interesting ideas there. I had a conversation with a friend the other day and the whole blockchain then, AI now thing reminded me of a saying about shelling “Picks and Shovels during a Gold Rush”. I think it is intriguing that GPUs are the “picks and shovels” of both the Blockchain Rush and the AI Rush. One could point out conspiracies and PR, another could point out that the as GPUs become more general compute tools, new applications will emerge.
  - cloudking 4y ago
    It takes about 5 minutes playing with ChatGPT to realize it has real time saving value, seems like author hasn't really tried to use it in their work. While I agree there is a hype bubble forming, I disagree with the premise that it only produces garbage.
    - shanusmagnus 4y ago
      That's my beef with most of the critical takes. Yeah, it has some warts, but an hour playing with the thing, for both broader chat interaction and writing code, make the value evident, and startling.
    - AnotherGoodName 4y ago
      The obvious thing is that we'll finally get voice assistants that can do more than pre-programmed tasks. Right now I can basically ask my home assistant "what's the time/weather" and "play some music". Anything else returns "i don't understand". I can see ChatGPT has huge potential here to give at least somewhat sane voice assistant responses.
dzdt 4y ago
Good context by Matt Levine a few days ago [1]. Basically Silvergate did a lot of business with crypto firms and got burned not by crypto speculation but just by holding long maturity safe assets when too many of their customers wanted to withdraw money on a short term basis. The result was falling below the line of being "well capitalised" as a bank. Bank regulation seems to be working here: there is no indication of wrongdoing or losses to depositors... [1] https://www.bloomberg.com/opinion/articles/2023-03-02/silvergate-had-a-crypto-bank-run https://www.bloomberg.com/opinion/articles/2023-03-02/silver...
- rkagerer 4y ago
  [1] https://archive.is/yH1A5 https://archive.is/yH1A5
  - rkagerer 4y ago
    Silvergate’s assets are real boring normal stuff Their safe, boring assets weren't safe and boring enough. Why can't there be a bank like this that just keeps your cash as cash?
    - Temporary_31337 4y ago
      Because customers expect low or no fees for just holding cash.
    - ivalm 4y ago
      Presumably because then they would have to charge you a percentage of your money for storage and people don’t want to pay the bank.
      - eyelidlessness 4y ago
        And for pretty good reason, at least it seems to me. Doing business with physical currency is not just objectively worse than digital transactions under most circumstances, it’s also increasingly untenable for more and more of life. Banking services basically are so successful they became a necessity for the vast majority of people who can access them—you have to have money storage, as a prerequisite to moving money you can’t or don’t wish to store. I can’t think of a reason I should pay a bank for the privilege of access to paying some of my own money to another party. On the other hand, I think this is just as good an argument that the kind of banking I’m describing should be a public good rather than a part of the services provided by investment firms. I even think there’s fairly good precedent for that argument, albeit at a drastically larger scale and with an unfortunately storied history of fraud and abuse.
colesantiago 4y ago
[flagged]
- dylan604 4y ago
  Web3 wants to have a word /s
- alphanullmeric 4y ago
  crypto does a great job of preventing you from speculating about other people’s money
- valcron1000 4y ago
  Without crypto I wouldn't be able to work as a software engineer for international companies (unless I were to work for free). Maybe you should dig a bit deeper before making such comments
  - boc 4y ago
    Taxes are still due even if you aren’t getting paid in USD. I don’t understand how crypto is legitimately solving a problem for you.
    - valcron1000 4y ago
      Look up the current situation in Argentina, in depth and using local sources (not some random US newspaper) like r/argentina and r/merval.
  - colesantiago 4y ago
    Yet, what crypto was supposed to do already exists in a regulated environment. I know lots of software engineers and companies that use Wise to get paid / pay employees and contractors internationally with no issues there at all. So crypto is still not needed here at all.
    - valcron1000 4y ago
walterbell 4y ago
WSOP coverage: https://wallstreetonparade.com/2023/03/fdic-investigators-are-on-the-premises-of-collapsing-federally-insured-crypto-depositor-bank-silvergate-its-not-a-friendly-visit/ https://wallstreetonparade.com/2023/03/fdic-investigators-ar... > Silvergate’s ability to find a white knight bidder to “salvage” the bank ended when gutsy U.S. Senators Elizabeth Warren (D-MA), John Kennedy (R-LA), and Roger Marshall (R-KS) released a letter on January 30 to the bank’s CEO, Alan Lane. https://wallstreetonparade.com/2023/03/silvergate-a-federally-insured-bank-just-blew-up-from-ties-to-crypto/ https://wallstreetonparade.com/2023/03/silvergate-a-federall... > Another way that Silvergate apparently met the run on the bank was to obtain $4.3 billion in advances from the Federal Home Loan Bank of San Francisco – a program meant to support housing for the poor.
exhibitapp 4y ago
[dead]
gjvc 4y ago
this is the latest institution that short-seller Marc Cohodes https://twitter.com/AlderLaneEggs https://twitter.com/AlderLaneEggs has been early in identifying as worthless
- TacticalCoder 4y ago
  Indeed. For those unaware: while the mainstream media were busy castin SBF, frontpage, as an altruistic white knight, Marc Cohodes was out there telling everyone that SBF was a "no name" (his words) fraudster running a ponzi scam.
AtlasBarfed 4y ago
What, no bailout? Guess they don't know the right people.

102 points by pg_bot 4y ago

Necessary context: Silvergate Bank was a major (by crypto standards) bank underpinning crypto companies. https://en.wikipedia.org/wiki/Silvergate_Bank https://en.wikipedia.org/wiki/Silvergate_Bank

Aloha 4y ago
Yeah, I was going off to link something similar. I was lost as to relevance. https://www.cnbc.com/2023/03/08/silvergate-shutting-down-operations-and-liquidating-bank.html https://www.cnbc.com/2023/03/08/silvergate-shutting-down-ope...
rippercushions 4y ago
More to the point, Silvergate was one of exactly two banks serving crypto companies in the US. The other, Signature Bank, is also under a lot of regulatory pressure and it has already cut off eg. Binance and Kraken.
- yieldcrv 4y ago
  There will be other banks and onramps. There was a time before those two banks. And there are many more institutions open to the business now.
  - shanusmagnus 4y ago
    What about recent events would suggest more institutions wanting to get a piece of this action? I'm not being snarky, I'm trying to figure out where banking is going to come from now. Cobbled together small players, is that what it looks like?
    - yieldcrv 4y ago
      Plenty of banks want billions of dollars of business. Smaller banks jump at 100 million of deposits here and there for some niche market. The properly run crypto organizations are still banked fine, USDC - a stablecoin that isn't considered controversial - has $40bn on deposit at BNY Mellon. There are also many financial institutions under state charters and other concoctions that are or seek to operate better for the crypto industry. And crypto organizations have undergone more serious stress tests and banking isolation before. Silvergate's stress came from holding normal super boring bonds and needing to liquidate those, it needed to liquidate because of the mismanaged crypto organizations, but its ability to liquidate came from its own portfolio choices during a coincidental macroeconomic environment and not crypto.
  - lmm 4y ago
    > And there are many more institutions open to the business now. Is that really true? I got the impression the cryptocurrency industry was shrinking these days, with lots of companies that had previously announced involvement now exiting.
  - orangepurple 4y ago
    Not in the United States. Too much regulatory pressure right now.

LatteLazy 4y ago

This is a real pity.

elkos 4y ago
How so?
- Scoundreller 4y ago
  My guess is the loss of a crypto on/off-ramp in USA.
  - deleted 4y ago
    [deleted]
- LatteLazy 4y ago
  They provide (provided) good quality, legal, regulated, transparent services to a market that often lacks all those things. They were a small company just trying to "get by" and they worked hard to get into a good position. Now they've been killed by regulators both under and over regulating them. They're basically collateral damage to congress refusing to do it's job...
madballster 4y ago
Why - unless you're being sarcastic? Looks to me like the system is working Early warning system pushed the bank to unwind positions before hurting depositors. Regulation appears to be working well, for once.

elektor 4y ago

It's interesting to see how quickly the public interest (and money!) has shifted from cryptocurrency to AI.

AceJohnny2 4y ago
Heh, cstross even has a "conspiracy" theory about that sudden shift: https://www.antipope.org/charlie/blog-static/2023/02/place-your-bets.html https://www.antipope.org/charlie/blog-static/2023/02/place-y... (Which I don't buy)
- elkos 4y ago
  There are some pretty interesting ideas there. I had a conversation with a friend the other day and the whole blockchain then, AI now thing reminded me of a saying about shelling “Picks and Shovels during a Gold Rush”. I think it is intriguing that GPUs are the “picks and shovels” of both the Blockchain Rush and the AI Rush. One could point out conspiracies and PR, another could point out that the as GPUs become more general compute tools, new applications will emerge.
- cloudking 4y ago
  It takes about 5 minutes playing with ChatGPT to realize it has real time saving value, seems like author hasn't really tried to use it in their work. While I agree there is a hype bubble forming, I disagree with the premise that it only produces garbage.
  - shanusmagnus 4y ago
    That's my beef with most of the critical takes. Yeah, it has some warts, but an hour playing with the thing, for both broader chat interaction and writing code, make the value evident, and startling.
  - AnotherGoodName 4y ago
    The obvious thing is that we'll finally get voice assistants that can do more than pre-programmed tasks. Right now I can basically ask my home assistant "what's the time/weather" and "play some music". Anything else returns "i don't understand". I can see ChatGPT has huge potential here to give at least somewhat sane voice assistant responses.

dzdt 4y ago

Good context by Matt Levine a few days ago [1]. Basically Silvergate did a lot of business with crypto firms and got burned not by crypto speculation but just by holding long maturity safe assets when too many of their customers wanted to withdraw money on a short term basis. The result was falling below the line of being "well capitalised" as a bank. Bank regulation seems to be working here: there is no indication of wrongdoing or losses to depositors... [1] https://www.bloomberg.com/opinion/articles/2023-03-02/silvergate-had-a-crypto-bank-run https://www.bloomberg.com/opinion/articles/2023-03-02/silver...

rkagerer 4y ago
[1] https://archive.is/yH1A5 https://archive.is/yH1A5
- rkagerer 4y ago
  Silvergate’s assets are real boring normal stuff Their safe, boring assets weren't safe and boring enough. Why can't there be a bank like this that just keeps your cash as cash?
  - Temporary_31337 4y ago
    Because customers expect low or no fees for just holding cash.
  - ivalm 4y ago
    Presumably because then they would have to charge you a percentage of your money for storage and people don’t want to pay the bank.
    - eyelidlessness 4y ago
      And for pretty good reason, at least it seems to me. Doing business with physical currency is not just objectively worse than digital transactions under most circumstances, it’s also increasingly untenable for more and more of life. Banking services basically are so successful they became a necessity for the vast majority of people who can access them—you have to have money storage, as a prerequisite to moving money you can’t or don’t wish to store. I can’t think of a reason I should pay a bank for the privilege of access to paying some of my own money to another party. On the other hand, I think this is just as good an argument that the kind of banking I’m describing should be a public good rather than a part of the services provided by investment firms. I even think there’s fairly good precedent for that argument, albeit at a drastically larger scale and with an unfortunately storied history of fraud and abuse.

colesantiago 4y ago

[flagged]

dylan604 4y ago
Web3 wants to have a word /s
alphanullmeric 4y ago
crypto does a great job of preventing you from speculating about other people’s money
valcron1000 4y ago
Without crypto I wouldn't be able to work as a software engineer for international companies (unless I were to work for free). Maybe you should dig a bit deeper before making such comments
- boc 4y ago
  Taxes are still due even if you aren’t getting paid in USD. I don’t understand how crypto is legitimately solving a problem for you.
  - valcron1000 4y ago
    Look up the current situation in Argentina, in depth and using local sources (not some random US newspaper) like r/argentina and r/merval.
- colesantiago 4y ago
  Yet, what crypto was supposed to do already exists in a regulated environment. I know lots of software engineers and companies that use Wise to get paid / pay employees and contractors internationally with no issues there at all. So crypto is still not needed here at all.
  - valcron1000 4y ago

walterbell 4y ago

WSOP coverage: https://wallstreetonparade.com/2023/03/fdic-investigators-are-on-the-premises-of-collapsing-federally-insured-crypto-depositor-bank-silvergate-its-not-a-friendly-visit/ https://wallstreetonparade.com/2023/03/fdic-investigators-ar... > Silvergate’s ability to find a white knight bidder to “salvage” the bank ended when gutsy U.S. Senators Elizabeth Warren (D-MA), John Kennedy (R-LA), and Roger Marshall (R-KS) released a letter on January 30 to the bank’s CEO, Alan Lane. https://wallstreetonparade.com/2023/03/silvergate-a-federally-insured-bank-just-blew-up-from-ties-to-crypto/ https://wallstreetonparade.com/2023/03/silvergate-a-federall... > Another way that Silvergate apparently met the run on the bank was to obtain $4.3 billion in advances from the Federal Home Loan Bank of San Francisco – a program meant to support housing for the poor.

exhibitapp 4y ago

[dead]

gjvc 4y ago

this is the latest institution that short-seller Marc Cohodes https://twitter.com/AlderLaneEggs https://twitter.com/AlderLaneEggs has been early in identifying as worthless

TacticalCoder 4y ago
Indeed. For those unaware: while the mainstream media were busy castin SBF, frontpage, as an altruistic white knight, Marc Cohodes was out there telling everyone that SBF was a "no name" (his words) fraudster running a ponzi scam.

AtlasBarfed 4y ago

What, no bailout? Guess they don't know the right people.