Tag: Collapse

Public Worry Grows Over Bank Stability

by Blockchain News

In a recent Gallup poll conducted across the United States in April, 48% of respondents expressed concern about their money in the bank, with almost 20% indicating they were “very concerned.” The poll was conducted after the collapse of Silicon Valley Bank and Signature Bank but before the failure of First Republic Bank in late April. According to Gallup, this level of worry is on par with the last bank-induced financial crisis in 2008, when financial institutions previously believed to be “too big to fail” collapsed.

Experts at the Hoover Institution think tank suggest that if half of all uninsured savers withdrew their cash, 186 American banks would be at risk of impairment. These banks have total assets of $300 billion but represent less than 5% of the estimated 4,135 FDIC (Federal Deposit Insurance Corporation) insured commercial banks in the United States.

Additionally, California-based PacWest, Arizona’s Western Alliance, and Memphis-based First Horizon reportedly hang in the balance following a share price slump last week. A more concerning report from the UK’s Telegraph earlier this month suggested that half of the banks in America could be insolvent. The report cited research published in April by Stanford University banking expert Amit Seru, who estimated that more than 2,315 U.S. banks are currently sitting on assets worth less than their liabilities.

“The U.S. banking system’s market value of assets is $2.2 trillion lower than suggested by their book value of assets accounting for loan portfolios held to maturity,” Seru said. This gap is due to the banks’ underestimation of the risk of loan defaults and represents a significant threat to the stability of the banking system.

The current public opinion of banks appears to be dwindling as the industry struggles to contain the collapse of several high-profile financial institutions in recent months. While these concerns are not yet at crisis levels, they do suggest a lack of confidence in the banking system. It remains to be seen what steps regulators will take to address these issues and restore public faith in the stability of financial institutions.

Source

Tagged : / / / / /

Signature Bank Collapse Blamed on Poor Management

by Blockchain News

Signature Bank’s Collapse Blamed on Poor Management and Inadequate Risk Management Practices

Signature Bank, a New York-based bank that catered to corporate and high-net-worth clients, collapsed on March 12, 2023. In the wake of the bank’s collapse, the United States Federal Deposit Insurance Corporation (FDIC) conducted a post-mortem assessment to determine the cause of the bank’s failure. The FDIC’s assessment revealed that poor management and inadequate risk management practices were the root causes of Signature Bank’s collapse.

According to the FDIC, Signature Bank’s senior management failed to adequately monitor and control the bank’s risk exposures, which ultimately led to the bank’s downfall. The FDIC also noted that the bank’s board of directors did not provide effective oversight of management’s actions, further contributing to the bank’s collapse.

The FDIC’s assessment of Signature Bank’s risk management practices revealed several shortcomings. For example, the bank did not have adequate controls in place to manage its credit risk exposures. Additionally, the bank’s risk management systems and processes were not integrated, making it difficult to obtain a comprehensive view of the bank’s risk exposures.

In addition to the bank’s poor risk management practices, the FDIC’s assessment also identified deficiencies in Signature Bank’s operations and internal controls. For example, the bank did not have adequate procedures in place for verifying customer identities and detecting potential money laundering activities.

The FDIC’s assessment of Signature Bank’s collapse underscores the importance of effective risk management practices in the banking industry. Banks must have robust risk management systems and processes in place to identify, measure, monitor, and control their risk exposures. Additionally, senior management and board members must be actively engaged in overseeing the bank’s risk management activities.

In response to Signature Bank’s collapse, the FDIC has taken steps to strengthen its oversight of the banking industry. The FDIC has increased its examination frequency for banks that pose a higher risk to the insurance fund. Additionally, the FDIC has enhanced its risk management guidance for banks to promote better risk management practices.

In conclusion, the collapse of Signature Bank serves as a cautionary tale for the banking industry. Banks must prioritize effective risk management practices to prevent similar failures in the future. Furthermore, regulators and industry participants must work together to promote a strong and resilient banking system that can withstand economic shocks and protect the interests of depositors and the broader economy.

Source

Tagged : / / / / /

South Korean prosecutors trace millions in illicit funds tied to Terra co-founder

by Blockchain News

South Korean prosecutors are actively tracing illicit funds linked to Terraform Labs co-founder Do Kwon and his associates. A recent investigation identified 414.5 billion won ($314.2 million) in illegal assets, with approximately 91.4 billion won ($69 million) of that amount directly linked to Kwon. Despite the large sum of money tied to Kwon, the South Korean authorities are unable to recover any of the assets due to Kwon’s reported conversion of the funds into Bitcoin using overseas exchanges.

According to a report published by KBS, a local media outlet, Kwon converted most of the illicit funds into Bitcoin instead of investing in physical assets. This has made it difficult for the South Korean authorities to recover the assets since they are not under their jurisdiction. The investigation into Terra’s collapse by the United States Securities and Exchange Commission (SEC) revealed that Kwon siphoned nearly $100 million worth of Bitcoin from Terra after the collapse.

Further reports based on an SEC interview with former Terraform Labs revealed that Kwon was accused of siphoning $80 million a month before the collapse of the Terra ecosystem. This has led South Korean prosecutors to actively trace properties associated with Terraform Labs executives to recover some of the illicit funds from the Terra debacle.

In their pursuit of justice, South Korean prosecutors have seized homes and other assets to stop former Terra employees from selling assets that might be tied to legal cases. Among the assets seized are residences in Seoul owned by former CEO Shin Hyun-seong and others. The prosecutors also filed foreclosure actions against foreign-registered vehicles, lands in Hwaseong and Gapyeong in Gyeonggi-do, and Taean in South Chungcheong Province.

Terra was a booming crypto ecosystem until its $40 billion collapse in May 2022 due to fraud, with Kwon at the epicenter. Initially thought to be a market-triggered event, the investigation revealed that Terraform Labs had dumped over $450 million of UST on the open market in the three weeks leading up to the depeg of the TerraUSD (UST) stablecoin. Four days after the last sale, UST started collapsing. Despite an arrest warrant from South Korean authorities and an Interpol red notice against his name, Kwon evaded arrest for nearly a year before being caught on March 23 in Montenegro.

In conclusion, the South Korean authorities are actively pursuing justice in the Terra debacle by tracing illicit funds and recovering assets tied to Terraform Labs executives. The investigation revealed the scale of the fraud committed by Do Kwon and Terraform Labs, leading to the collapse of the crypto ecosystem. Although most of the illicit funds have been converted into Bitcoin, the authorities remain vigilant in their efforts to recover the assets and bring those responsible to justice.

Source

Tagged : / / / / /

Terra’s Partnership with Washington Nationals Raises Eyebrows

by Blockchain News

Baseball fans attending the opening day of the Major League Baseball (MLB) season at Nationals Park in Washington D.C. were greeted with an unexpected sight – the prominent display of Terra, the cryptocurrency ecosystem that collapsed in May 2022. A Twitter user who attended The Washington Nationals’ home opener against the Atlanta Braves on March 30 shared an image of Terra prominently displayed on a banner with the slogan, “a decentralized economy needs decentralized money.”

While some attendees were intrigued by the appearance of Terra, others were left questioning the wisdom of the partnership between Terra and the Washington Nationals. One Twitter user noted that the Terra Club, a VIP pre-game venue experience, was located behind home plate at Nationals Park, with “a big sign in left center” promoting Terra.

The partnership between Terra and the Washington Nationals had been in effect since February 2022, just months before Terra’s collapse. The Terra community had committed $38.2 million in TerraUSD (UST) over five years to secure the deal. Terra’s founder, Do Kwon, proposed the partnership through the community’s governance platform.

However, the timing of the collapse of Terra has left some investors in the cryptocurrency wondering if they will ever see a return on their investment. In May 2022, Terra’s price plummeted, wiping out billions of dollars in market value. The collapse was attributed to a combination of factors, including a lack of transparency, poor risk management, and overreliance on leverage.

Adding to the uncertainty surrounding Terra is the arrest of its founder, Do Kwon. Kwon is currently in police custody in Montenegro and is reportedly facing harsh conditions in the penal system. According to an unnamed criminal defense lawyer cited in a March 29 Protos report, the conditions at Montenegro’s jails and prisons “haven’t changed” from those described in a 2020 human rights report by the United States State Department. The report cited a 2015 case in which prison officers were convicted of torturing and “inflicting grievous bodily harm” on 11 inmates.

Despite the collapse of Terra and the arrest of its founder, the partnership with the Washington Nationals remains in effect. The prominent display of Terra at Nationals Park raises questions about the wisdom of partnering with a cryptocurrency ecosystem that has experienced such a dramatic collapse. It also highlights the potential risks associated with investing in cryptocurrencies, which remain largely unregulated and subject to extreme volatility.

In conclusion, the appearance of Terra at Nationals Park during the Washington Nationals’ home opener on March 30 has drawn attention to the cryptocurrency ecosystem’s collapse and its partnership with the baseball team. While some attendees were intrigued by Terra’s message of “decentralized money,” others were left questioning the wisdom of partnering with a company that has experienced such a dramatic collapse. The arrest of Terra’s founder, Do Kwon, and the potential risks associated with investing in cryptocurrencies underscore the need for caution when investing in these emerging technologies.

Source

Tagged : / / / / /

FTX Founder Allegedly Sought Federal Regulation Before Collapse

by Blockchain News

FTX was one of the most important cryptocurrency exchanges prior to its failure, which coincided with the creator and CEO, Sam Bankman-Fried, resigning from his position. The platform’s image, on the other hand, was damaged by charges of the theft of cash belonging to its users. Despite this, it was revealed that Bankman-Fried was attempting to have FTX subject to government regulation in an email exchange from May of 2022 that was stolen.

According to the Washington Examiner, Bankman-Fried contacted Martin Gruenberg, the chairman of the Federal Deposit Insurance Corporation (FDIC), in May 2022 and invited him to a meeting on June 13, 2022. This communication was made possible by Mark Wetjen, a former commissioner of the Commodities Futures Trading Commission (CFTC) who had only just started working for FTX US in the role of head of policy and regulatory strategy.

Based on the flow of emails, it was clear that Bankman-Fried was attempting to “promote discourse” and “starting examining” the prospect of FDIC regulation for FTX. This action was probably taken as a reaction to the rising regulatory scrutiny that bitcoin exchanges in the United States are now under. On the other hand, it is not known whether or not the meeting with Gruenberg actually took place, nor can it be established whether or not FTX was successful in its attempt to get federal regulation.

The failure of FTX in November 2022 may be attributed to a number of issues, including claims of fraudulent activity and poor management. In the wake of the collapse, Bankman-Fried stepped down from his position as CEO, although he continues to be a significant role in the bitcoin sector. Bankman-attempts Fried’s to seek government regulation for the exchange may have been a symptom of his intention to establish FTX as a reputable and trustworthy platform, notwithstanding the controversy that surrounds FTX.

Source

Tagged : / / / / /

NFT Trading Volumes Plunge After Silicon Valley Bank Collapse

by Blockchain News

Non-fungible tokens, or NFTs, have been a hot topic in the crypto and art worlds lately, with some NFT artworks selling for millions of dollars. NFTs are unique digital assets that are authenticated on a blockchain, giving them a certain level of rarity and value. However, the collapse of Silicon Valley Bank has had a significant impact on the NFT market, with trading volumes and sales counts plummeting.

Silicon Valley Bank is a major US bank that provides banking and financial services to technology and life science companies. Its collapse on March 10 sent shockwaves through the financial industry and caused fear and uncertainty among traders, including those in the NFT market. The drop in NFT trading volumes from $74 million to $36 million, as reported by DappRadar, shows how much the market was affected by the bank’s collapse. This decline in trading volume was accompanied by a 27.9% drop in daily NFT sales count between March 9 and March 11.

The decrease in NFT trading volumes and sales counts is a cause for concern, as it indicates a lack of confidence in the market. Traders are understandably worried about the potential repercussions of a major US bank going under, and this has led many to flee the market altogether. The low number of active NFT traders on March 11, at just 11,440, was the lowest recorded since November 2021, which further illustrates the impact of the bank’s collapse.

This setback for the NFT market comes at a time when the industry has been gaining significant attention and traction. The market for NFTs has exploded in recent months, with artists, musicians, and athletes all jumping on the bandwagon. However, the NFT market is still relatively new, and events like the collapse of Silicon Valley Bank serve as a reminder of its volatility.

It is worth noting that the NFT market is not the only one affected by the collapse of Silicon Valley Bank. The bank’s clients in the technology and life science sectors are also feeling the impact, as they may have difficulty accessing funds and financing. The bank’s collapse may also have wider implications for the broader financial industry, as it raises questions about the stability of the banking system.

Despite the recent setback, there is reason to believe that the NFT market will recover. The market has shown resilience in the face of previous challenges, and it is likely that traders will return once the dust settles. However, the industry will need to address the concerns raised by the collapse of Silicon Valley Bank and work to build confidence and stability in the market.

In conclusion, the collapse of Silicon Valley Bank has had a significant impact on the NFT market, with trading volumes and sales counts dropping sharply. This setback serves as a reminder of the volatility of the NFT market and raises concerns about its stability. However, the market has shown resilience in the face of previous challenges, and it is likely that it will recover in due course. The industry will need to address the concerns raised by the bank’s collapse and work to build confidence and stability in the market moving forward.

Source

Tagged : / / / / /

US DOJ and SEC launch inquiries into Silicon Valley Bank collapse

by Blockchain News

The sudden collapse of Silicon Valley Bank (SVB) has attracted the attention of the US Department of Justice (DoJ) and Securities and Exchange Commission (SEC), who have launched investigations into events leading up to the bank’s closure. According to sources, the probes will scrutinize the stock sales made by SVB financial officers in the weeks before the bank’s collapse, as well as the events that led to its failure.

Reports suggest that SVB’s CEO, Greg Becker, and chief financial officer, Daniel Beck, sold shares just two weeks before the bank’s collapse, outraging some observers. Becker reportedly sold $3.6 million worth of shares on February 27, while Beck sold $575,180 in stocks on the same day. In total, SVB executives and directors cashed out $84 million worth of stock over the past two years.

The investigations are in their early stages and may not lead to charges or allegations of wrongdoing, according to sources. However, a formal announcement from the DoJ is expected in the coming days, says another person with direct knowledge of the situation.

In addition to the investigations by the DoJ and SEC, the US Federal Reserve is also looking into how it supervised and regulated SVB before its collapse.

SVB Financial Group, SVB’s parent organization, and two executives were sued by shareholders on March 13. The lawsuit accuses them of failing to disclose how rising interest rates would leave the bank “particularly susceptible” to a bank run. The lawsuit seeks damages for SVB investors from June 16, 2021, to March 10, 2023.

The collapse of SVB has sent shockwaves through the financial industry, prompting warnings from the SEC about potential violations of US securities laws. The investigations by the DoJ and SEC are expected to shed more light on the events that led to the bank’s collapse and the stock sales made by its financial officers.

Source

Tagged : / / / / /

SVC Bank Caught in SVB Collapse Confusion

by Blockchain News

The recent collapse of Silicon Valley Bank (SVB), a major banking institution based in California, has sent shockwaves throughout the global financial sector. While countless businesses have been directly affected by the bank’s downfall, a bank in India with no connection to SVB has also felt the consequences of the crisis due to a simple mix-up in acronyms.

Shamrao Vithal Co-operative Bank (SVC Bank), a 116-year-old cooperative bank based in Mumbai, India, found itself caught in the line of fire when the news of SVB’s imminent shutdown began to spread on March 10. The similarity between the short forms of the two banks, SVB and SVC Bank, led to confusion among some Indian citizens, who mistakenly associated the Indian bank with the crisis in the United States.

Silicon Valley Bank has been a significant player in the banking industry, particularly in the technology and startup sectors. Founded in 1983, SVB has been a crucial financial partner to various emerging tech companies and venture capital firms. The bank’s collapse has raised concerns over the stability of the financial sector and the impact it may have on businesses tied to the bank.

In contrast, Shamrao Vithal Co-operative Bank has a long-standing history in India, having been established in 1907. As a cooperative bank, it focuses on serving the needs of its members and promoting financial inclusion in the country. SVC Bank offers a wide range of financial products and services, including savings accounts, loans, and insurance. The bank has successfully navigated numerous financial challenges throughout its history and remains an important institution in the Indian banking sector.

Despite the clear differences between the two banks and their respective markets, the confusion caused by the similarity in their acronyms led to panic among some SVC Bank customers. As a result, the Indian bank was forced to clarify its position and reassure its customers that it was not connected to the crisis unfolding in the United States.

This incident highlights the potential for misunderstandings in an increasingly interconnected world, where news spreads rapidly across borders, and even a minor mix-up can have significant consequences. It serves as a reminder for both financial institutions and the public to be vigilant in verifying information and understanding the differences between seemingly similar entities.

Source

Tagged : / / / / /

Investors Rally to Support Silicon Valley Bank Amidst Possible Closure

by Blockchain News

Silicon Valley Bank (SVB) has been a major player in the tech industry for over 40 years, providing banking and funding services to countless startups and established companies alike. However, recent reports have indicated that the bank may be facing financial difficulties and could be winding down operations in the near future. This news has sent shockwaves throughout the industry, as many tech companies rely heavily on SVB for their banking needs.

In response to these concerns, a group of over 125 venture capitalists and investors have banded together to support SVB and limit the potential fallout from the bank’s collapse. The investors, which include some of the biggest names in the industry such as Sequoia Capital and General Catalyst, have signed a statement pledging their support for the bank and offering to help it find new sources of capital if necessary.

The statement reads in part, “We, the undersigned venture capitalists and investors, recognize the critical role that Silicon Valley Bank has played in the growth and success of the tech industry. We believe that it is essential to support SVB during this challenging time, and we stand ready to assist in any way we can to ensure that the bank continues to serve the needs of tech companies for years to come.”

The investors’ support for SVB comes at a time when many tech companies are already struggling due to the ongoing COVID-19 pandemic and its economic fallout. Losing access to funding and banking services from SVB could be a major blow for many companies, and could even lead to some going out of business altogether.

To avoid this outcome, the investors are offering to help SVB find new sources of capital, whether through traditional financing or alternative methods such as crowdfunding or community fundraising. They also plan to work with the bank to explore new business models and revenue streams that can help it remain viable in the long term.

Despite the challenges that SVB is currently facing, the bank remains a critical component of the tech industry and has a strong track record of supporting startups and other companies in their early stages. By rallying around SVB and offering their support, these investors are demonstrating their commitment to the industry as a whole and their belief that together, they can weather even the toughest storms.

Source

Tagged : / / / / /

Yellen Works with Regulators to Address Silicon Valley Bank Collapse

by Blockchain News

On March 10, 2023, California’s financial watchdog shut down Silicon Valley Bank (SVB) following an announcement of a significant sale of assets and stocks to raise $2.25 billion in capital to shore up operations. As a result, the Federal Deposit Insurance Corporation (FDIC) was appointed as the receiver to protect insured deposits. While the FDIC only insures up to $250,000 per depositor, per institution, and per ownership category, concerns are mounting about the impact of the collapse of SVB, particularly on small businesses that employ people across the country.

In response to the situation, United States Treasury Secretary Janet Yellen is working with regulators to address the collapse of SVB. In a recent interview with CBS News, Yellen stated that they are designing “appropriate policies to address the situation” at the bank. She also noted that they are not considering a major bailout, citing the reforms that have been put in place since the financial crisis. However, Yellen emphasized that they are focused on protecting depositors and are working with regulators to address their concerns.

One of the challenges facing depositors is the fact that most accounts at SVB are unsecured. Yellen acknowledged this issue and stated that regulators are “very aware of the problems that depositors will have.” She also expressed concern about the possibility of contagion to other regional American banks, stating that “the goal always is supervision and regulation is to make sure that contagion can’t- can’t occur.”

SVB is one of the top 20 largest banks in the United States and provides banking services to many crypto-friendly venture firms. According to a Castle Hill report, assets from Web3 venture capitalists totaled more than $6 billion at the bank, including $2.85 billion from Andreessen Horowitz, $1.72 billion from Paradigm, and $560 million from Pantera Capital. Yellen’s comments indicate that regulators are well aware of the significance of the collapse of SVB and are working to mitigate its impact.

Regarding the options available to the FDIC, Yellen noted that they are considering “a wide range of available options,” including acquisitions from foreign banks. She also emphasized that they are working to address the situation in a timely way.

In conclusion, Yellen’s remarks highlight the seriousness with which regulators are approaching the collapse of SVB. While a major bailout is off the table, protecting depositors, particularly small businesses, is a top priority. Regulators are exploring a range of options, including acquisitions from foreign banks, to address the situation and prevent contagion to other regional American banks.

Source

Tagged : / / / / /
Bitcoin (BTC) $ 27,556.38 1.58%
Ethereum (ETH) $ 1,665.85 3.57%
Litecoin (LTC) $ 66.24 2.56%
Bitcoin Cash (BCH) $ 250.23 2.51%