Silicon Valley Bank is a financial institution that provides banking services to technology and innovation-based companies, as well as venture capitalists and private equity firms. On Friday (10.03.2023), the banking regulators in the US shut down the Silicon Valley Bank (SVB). It has sent shock waves across the tech and banking industries, as this leaded to the fall of one of the most sustainable US stablecoin called as USDC.
Moreover, it is the 2nd bank, after Silvergate, that collapsed last week. It was followed by the US banking regulators shutting down the Signature Bank on Sunday, the third bank to close its doors in a week. This was followed by a sharp drop in the shares of many large banks, including First Republic Bank which lost more than 65% of its shares after other banks bankrupt.
In our article, we’ll discuss what happened and how to find the best place to store crypto and money.
Nothing new, actually. Silicon Valley Bank didn’t have enough money to cover all the users’ funds. When people started to get news, that SVB has some sort of liquidity problems, investors and holders started to get back their funds from the bank. Its shares started to fall rapidly. Less than in 48 hours, 16th largest US bank went bankrupt. All these facts led to that an enormous amount of money of individuals and legal entities turned out to be locked in Silicon Valley Bank. So we got a situation where there is a massive drop in banks shares on one hand and unpredictable USDC price reduction on the other.
SVB’s failure didn’t have anything directly to do with the ongoing crypto winter. Crypto firm Circle operates a stablecoin, USDC, that’s backed with cash reserves — $3.3 billion of which are stuck at Silicon Valley Bank. USDC price should always be $1, but it started to fall after SVB failed, dropping as low as 87 cents. Because of that, Coinbase stopped exchanges between USDC and the dollar.
On March 11th, Circle said that it “will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.” The stablecoin’s value mostly recovered.
Bankrupt crypto lender BlockFi also has $227 million in funds stuck, too. The Avalanche Foundation, which supports the Avalanche blockchain, also announced that it has “a little over” $1.6 million in exposure to Silicon Valley Bank. The other blockchain protocol, Ripple also has been affected by the exposure to the Silicon Valley Bank.
We’d like to mention that it’s very sad to hear all the news about our crypto colleagues that were affected by this situation. We sincerely sympathize with them and wish them a speedy recovery.
Foremost, as we always say – #DYOR (Do your own research). The main reason of bankrupts that we see during last 5 years in financial and especially crypto sphere is that company reuse their users funds and eventually cannot cover all the users’ assets.
We stand against reusing of user’s funds at CoinRabbit and hold user assets 1:1, plus reserves. For example, when a user deposits one Bitcoin, CoinRabbit‘s reserves increase by at least one Bitcoin to ensure client funds are fully backed.
What this means in actual terms is that CoinRabit’s holds all user assets 1:1 (as well as some reserves), we have zero debt in our capital structure, and we have made sure that we have an emergency fund (SAFU fund) for extreme cases. Moreover, we have special department which takes control over monitoring and managing financial risks. Hard work on that direction gives us a guarantee to avoid such situations.
Analyse the information about the company before taking your money there. Chose only that companies which do not reuse your funds; check the information concerning reserves of assets, and do not hold all assets at the same place.
While using CoinRabbit you can be sure, that your assets are in safe place, as we store them on cold wallets and hold user assets 1:1. You’ll easily get them back, and you will be able to get access to your funds whenever you’d like to. That is the principle of CoinRabbit that will never change.
Learn about Reef, a blockchain built for finance and powering decentralized finance (DeFi) applications. Discover… Read More
Learn about Injective, a blockchain built for finance and powering decentralized finance (DeFi) applications. Discover… Read More
CULT DAO aims to break the chains of centralization and offer financial freedom to its… Read More
DINO cryptocurrency is a community-driven and 100% fairly launched defi-based meme token that believes in… Read More
Are you in need of some quick cash but hesitant to sell your beloved cryptocurrency… Read More
In the fast-paced world of cryptocurrency, where new projects and coins appear almost every day,… Read More