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this week on crypto twitter
Illustration by Mitchell Preffer for Decrypt

Prices took a dive this week as two banks closely connected to the crypto industry both sank. The first was Silvergate, an actual crypto bank, and the second was Silicon Valley Bank, a tech- and startup-focused institution that holds key crypto players as clients, including stablecoin issuer Circle and crypto VC firms Andreessen Horowitz (a16z) and Sequoia Capital.

On Thursday Ram Ahluwalia, CEO of SEC-registered investment advisory firm Lumida, criticized Senator Elizabeth Warren’s negative reaction to the news of Silvergate’s collapse.

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The following day, reports emerged that Silicon Valley Bank (SVB) was looking for outside acquisition. Not long after they hit the press, California's Department of Financial Protection and Innovation shut the bank down and appointed the Federal Deposit Insurance Corporation (FDIC) to take over operations.

Jamie Quint, a general partner at investment firm Uncommon Capital, wrote a long and helpful primer on SVB’s downfall.

American investor and entrepreneur Bill Ackman called for government intervention in a multi-tweet thread.

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Fintech investor GurGavin cried that there was some double dealing from SVB executives.

Other reports revealed that SVB’s top exec was aggressively lobbying lawmakers for weaker banking regulations.

Raging Capital Ventures, an account that provides financial, political and tech commentary, did a multi-tweet deep dive on SVB’s perilous securities investments over the last couple years.

A video showing the reality of a bank run made the rounds on Twitter this week.

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Former SVB employee Samir Kaji called it the “quickest bank run ever” in a long thread breaking down the collapse blow-by-blow.

Garry Tan, CEO of startup incubator YCombinator, shared the stark reality affecting the companies under his stewardship as a result of the news.

In his multi-tweet thread, New York Times journalist Paul Krugman accused SVB of “affinity fraud,” a form of confidence trickery, though not fraud in the “legal sense,” he explained.

On Saturday, Bill Ackman claimed to know what will happen to SVB depositors whose funds were locked in the bank at the time of collapse.

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Crypto companies distance themselves

Many crypto companies used Twitter to assure followers that they weren’t exposed to the collapsed banks. Tether CTO Paolo Ardoino said that Tether’s reserves were safe.

Chinese blockchain journalist Colin Wu confirmed Tether’s statement.

Avalanche admitted some exposure to SVB but none to Silvergate.

Bored Ape Yacht Club creator Yuga Labs denied it had anything in SVB.

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Square the Circle

On Friday, fears started growing around stablecoin issuer Circle, a company tied to both collapsed banks.

Circle itself tweeted to admit that it had limited exposure to SVB via its cash reserves, some of which it held with the bank.

Crypto holders were spooked regardless, and many ditched their USDC.

Popular crypto exchange Binance closed its in-house offramp, claiming this was standard procedure.

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Rival Coinbase also halted conversions.

There were some serious signs of slippage on Saturday. At the time of writing, USDC trades at five cents short of its dollar peg.

Circle eventually confessed the full extent of its exposure to SBV, which appears to be very small in proportion to its total cash reserves.

Circle CEO and co-founder Jeremy Allaire shared a blog post outlining the situation in more depth.

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One seriously unlucky crypto fan would have been better off sticking with USDC after getting burned for virtually their entire $2 million when trying to jettison it quickly… Ouch!

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