This Week on Crypto Twitter: Pundits Perform Post Mortem on Crypto Bank Crisis
Illustration by Mitchell Preffer for Decrypt
Crypto prices rallied this week on news that the US government will intervene to ensure that depositors of failed industry services institutions Silicon Valley Bank (SVB) and Signature would be made whole.
As you might expect, Crypto Twitter was all over the topic, as it were last week; but Monday’s news brought much needed shutdown of the industry.
Prices had suffered as far back as the beginning of the month, when another bank called Silvergate – which actually traded in crypto- late filing of its annual 10-K report with the US Securities and Exchange Commission (SEC), which leads to speculation about the state of the finances.
On Monday, a day after Signature was shut down by the New York State Charter Authority, the popular exchange Coinbase revealed the extent of its exposure to the bank and promised that it was business as usual.
In the UK that day, British Chancellor of the Exchequer Jeremy Hunt announced that his ministry had brokered a rescue deal in which HSBC bought the UK arm of SVB for £1 to make UK businesses with exposure to the bank whole.
Crypto journalist and podcaster Jason Yanowitz tweeted a list of alternatives to the two defunct banks.
The banking crisis news had self-proclaimed cypherpunk @dystopiabreaker apportion the blame solely on the authorities and their antipathy towards crypto.
Crypto venture capitalist Nic Carter, a general partner at Castle Island Ventures, said as much, using the words of Barney Frank, a former US politician, Wall Street reformer and Signature Bank board member.
Caitlin Long, founder of the crypto bank Custodia, jumped on a tweet by Forbes crypto analyst Jason Brett and joined the chorus of disgruntled crypto fans, accusing the Fed of hypocrisy and shady practices in their repeated rejection of her attempts to register her own institution with them.
Jessica Lessin, Founder of Technical Publication The informationwas upset by this part of the reporting on the SVB crisis by The Wall Street Journal. She is right. It is substandard.
On Thursday, the general irritation of US regulators appeared to have spread as far as Europe.
In other news
As it became clear that Silicon Valley Bank was in hot water, before any word of top-down intervention, consumer sentiment against USD Coin issuer Circle fell rapidly. Last weekend, the dollar-pegged stablecoin was actually reduced by 13 cents. At least one experienced trader worked the situation to his advantage.
On Monday, Stephane Kasriel, a FinTech executive at Facebook and Instagram parent company Meta, announced the end of NFT integration across the company. What next time? Will Meta abandon the metaverse pivot it has so flamboyantly prepared for?
Avalanche founder and CEO Emin Gün Sirer announced his new position as an advisor to DC regulators.
Jim Cramer’s financial advice made the rounds on Tuesday mainly for its comedy value.
Coinbase’s Conor Grogan churned a smart contract through ChatGPT-4 and found several vulnerabilities. Grogan is not the first and he certainly won’t be the last.
Republican Majority Whip Tom Emmer (R-MN) shared a letter he sent to the Federal Deposit Insurance Corporation on Wednesday, accusing the regulator of using the banking crisis to launch a purge of crypto-friendly institutions.
On Friday, Senator Elizabeth Warren tweeted some shameless and way over-the-top anti-crypto propaganda.
On the other end of the spectrum, pseudonymous Twitter financial commentator James Medlock and former Coinbase CTO and former Andreessen Horowitz partner Balaji Srinivasen are making a public bet of $1 million on the prospect of US hyperinflation and the possibility that it will cause the value of Bitcoin to shoot in the weather.