Silvergate, one of the most important banks serving crypto firms in the US, has officially declared bankruptcy after the collapse sparked by FTX depleted its financial strength. Industry experts predict the chain of bankruptcy will extend to banking services such as Silicon Valley Bank.
Silvergate collapsed, which crypto company is next?
US crypto banking service Silvergate has become the latest victim of the epidemic that rocked the crypto markets after the collapse of FTX. Alarm bells began to ring for investors after the company announced more than $1 billion in losses and $8 billion in deposit slips. cryptocoin.comIn this article, we have included the destruction caused by the news of bankruptcy.
According to the latest reports, the company is seeking consultants to seek out potential buyers after all attempts to raise capital have failed. Silicon Valley Bank (SVB), one of the banks operating in the same field as Silvergate, seems to be on the verge of a similar situation.
Worries triggered bank run event
Rising interest rates, recession concerns, bankruptcy crises and regulatory pressure in the US have led to massive capital outflows from the cryptocurrency market. As a result, there is a significant increase in requests for withdrawals from bank deposits at institutions such as the SVB.
According to details of documents released Wednesday, the SVB planned to sell a total of $1.25 billion of common stock and an additional $500 million of convertible preferred shares. According to a regulatory filing, SVB also announced that it has reached an agreement with investment firm General Atlantic to sell $500 million worth of common stock. However, the completion of this deal was dependent on the successful completion of the other stock offering.
BREAKING: SVB Financial in talks to sell itself after attempts to raise capital have failed, sources say (via @DavidFaber) https://t.co/VixRcKa3R1 pic.twitter.com/QdoxlgsTS0
— CNBC Now (@CNBCnow) March 10, 2023
Shares of Silicon Valley Bank (SIVB) fell 60% the next day after the firm announced its intentions to raise more than $2 billion on Wednesday evening. The share price fell another 60% in premarket trading on Friday. As of now, trading of SIVB shares has been suspended due to increased volatility.
Which companies might be in danger after the SVB?
Following in the footsteps of Silvergate and Silicon Valley Bank, market participants and experts predict a similar fate for First Republic Bank, which is being watched closely by US officials amid growing concerns about falling deposits. Headquartered in San Francisco, First Republic serves affluent individuals and business owners. These are customers who withdraw money from their bank accounts to look for Treasury and other products with higher interest rates.
UPDATE: Hearing that the FDIC and other agencies are keeping a sharp eye on First Republic Bank $FRC.
**agencies trying to preempt any potential crypto friendly banks.
**a reminder that the Elizabeth Warren’s of the body politic started with the Occupy Wall Street movement.
— Andrew (@AP_Abacus) March 10, 2023
First Republic deposits increased 13% in 2022 compared to the previous year; however, the lender had to pay more for these deposits, which affected the firm’s profitability statistics. In a move reminiscent of the SVB, the bank recently announced that it will seek new funding after the sale of a significant portion of its securities portfolio. First Republic (FRC) shares fell more than 50% after markets opened today and have since stopped trading further.
