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Crypto-friendly bank Silicon Valley Bank shut down by California regulator

Silicon Valley Bank officially sold to First Chinese Bank

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TL;DR

  • The California Department of Financial Protection and Innovation (DFPI) ordered Silicon Valley Bank to be closed.
  • The DFPI did not disclose why the shutdown was necessary but appointed the FDIC as receiver to protect all insured deposits.

On March 10, the California Department of Financial Protection and Innovation (DFPI) ordered Silicon Valley Bank, a major financial institution for venture-backed companies, to be closed—making it the first FDIC-insured bank failure in 2023. The DFPI did not disclose why the shutdown was necessary but appointed the FDIC as receiver to protect all insured deposits.

The FDIC announced that depositors would have full access to their insured deposits no later than Monday, March 13, 2023. Additionally, uninsured depositors will receive a “receivership certificate” for the remaining amount of their uninsured funds and be entitled to future dividend payments once all assets from Silicon Valley Bank (also known as SVB) have been sold. The bank operates 17 branches in California and Massachusetts; all will open on the 13th to allow depositor access.

SVB, one of the largest banks in the United States by total assets, faced a swift downfall less than 48 hours after disclosing its need to raise $2.25 billion in stock to maintain operations. In its mid-quarter financial update, SVB revealed that it had sold $21 billion in securities at a staggering loss of $1.8 billion. In addition, the bank has been providing financial services to well-known crypto-focused venture firms such as Andreessen Horowitz and Sequoia.

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At the start of the week, SIVB shares were trading above $280. Before trading was suspended, their value had dropped to $106.08. Source: Yahoo Finance

On March 9, SVB stock (SIVB) experienced a shocking 60% drop in value, and trading was immediately halted due to extreme volatility. This marked the biggest single-day wipeout in history.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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