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Silvergate Bank to begin voluntary liquidation

dfpi.ca.gov

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Re: Silvergate Bank to begin voluntary liquidation

#71

Post by adam_arthur »

nly wrote: post #70
panarky wrote: post #61

Earlier quoted context omitted.

Some are probably upset with it because they want Silvergate's liqudiation to be caused by crypto, and not super-safe US Treasurys. Turns out Silvergate's bitcoin loans are just fine, and it was the Treasurys that fucked them up. Others are probably upset with it because Silvergate had the option to hold cash as cash, or cash as one-month T-bills, and if they had done that, they wouldn't have had to liquidate. But in…

Its presumably not that market rates increased that fucked them up, it's that they couldn't hold to maturity due to short term redemptions?

Yes, despite these being "safe" they effectively took on duration risk, and their bonds were "callable" by their customers. Not safe at all despite credit-risk being low

Re: Silvergate Bank to begin voluntary liquidation

#72

Post by valcron1000 »

colesantiago wrote: post #66
valcron1000 wrote: post #62

Earlier quoted context omitted.

You don't know enough then. If I were to use Wise I would be getting half salary due to my country "regulations", not even mentioning that I wouldn't be getting dollars or the fact that it would be nearly impossible due to bureaucracy. Edit: forgot to mention that around a month ago Wise decided to no longer support my local currency, so there's also that.

I've just went onto Wise and they support Argentina Pesos and lots more, seems to be working all good, you realise that Wise isn't the only company that works in Argentina? Payoneer also works in Argentina and other countries and pays employees / contractors internationally. You really don't need crypto at all, since international payments is pretty a solved problem already and Wise, Payoneer etc is much safer to use…

I'm well aware of most payment options, I even have the Payoneer card. As I mentioned in other comments, I suggest that you look up how those services actually work for Argentinians and why they are not enough.

Crypto is the best solution to get paid, and I know it for a fact since I depend on my job to live.

Re: Silvergate Bank to begin voluntary liquidation

#73

Post by HWR_14 »

adam_arthur wrote: post #47
rkagerer wrote: post #32

Earlier quoted context omitted.

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?

Not sure why people are upset with this comment. Many banks do put customer funds into T-Bills, or park it with the Fed at the fed funds rate. Both of which are 0 risk and effectively instantly redeemable. And this is still highly profitable right now, if you offer customers yields below fed funds rate (~5%), the money on the spread is risk free. Pretty much every crypto adjacent firm has decided to take excessive ri…

This bank did put a ton of the money in T-Bills. The vast majority of the remainder was in boring stuff like longer-term bonds. A very small amount (relatively) was involved in bitcoin lending.

The problem is highly liquid and effectively instantly redeemable wasn't enough when the crypto world melted down and a huge percentage of their depositors needed money back right away. No bank can survive that. Wells Fargo just has customers from a wide enough crosssection that they won't all need their money back at once. But you can imagine it happening to a small local bank following a natural disaster as well.

Silvergate was solvent and has the assets to cover liabilities, just has liquidity issues.

Re: Silvergate Bank to begin voluntary liquidation

#74

Post by TacticalCoder »

gjvc wrote: post #46

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

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.

Re: Silvergate Bank to begin voluntary liquidation

#75

Post by rideontime »

AceJohnny2 wrote: post #6
elektor wrote: post #4

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

Heh, cstross even has a "conspiracy" theory about that sudden shift: https://www.antipope.org/charlie/blog-static/2023/02/place-y... (Which I don't buy)

That’s not conspiracy theory, that’s Occam’s Razor in action. It is very obviously the same people pumping this.

Re: Silvergate Bank to begin voluntary liquidation

#77

Post by unmole »

valcron1000 wrote: post #51
colesantiago wrote: post #8

[flagged]

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

This is the only real usecase for cryptocurrencies: Evasion of capital controls.

Re: Silvergate Bank to begin voluntary liquidation

#78

Post by resource0x »

dzdt wrote: post #7

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 o…

Then why is it being investigated? https://www.bloomberg.com/news/articles/2023-02-02/silvergat...

Re: Silvergate Bank to begin voluntary liquidation

#79

Post by JumpCrisscross »

rkagerer wrote: post #32
rkagerer wrote: post #17

Earlier quoted context omitted.

[1] https://archive.is/yH1A5

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?

> safe, boring assets weren't safe and boring enough

No, they weren't. Duration is a measured risk [1]. Silvergate chose a flighty, risky set of clients. Their portfolio should have been optimized for liquidity, not yield. They got greedy and are paying the price.

[1] https://en.wikipedia.org/wiki/Bond_duration

Re: Silvergate Bank to begin voluntary liquidation

#80

Post by LatteLazy »

elkos wrote: post #15
LatteLazy wrote: post #5

This is a real pity.

How so?

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...
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