Crypto Bank Crisis 2024: Top Analysis and Reactions on Crypto Twitter This Week

Representation through Mitchell Preffer for Decrypt

Crypto costs rebounded significantly this week following the announcement that the U.S. government will intervene to ensure that depositors of the failed industry-serving institutions, Silicon Valley Bank (SVB) and Signature Bank, will be fully compensated.

As anticipated, Crypto Twitter was abuzz with the topic, just as it was last week; however, Monday’s news brought much-needed closure to the industry.

Costs had suffered significantly since the beginning of the month, when another bank called Silvergate—which actually dealt in crypto—delayed filing its annual 10-K report with the U.S. Securities & Exchange Commission (SEC), prompting speculation about the state of its finances.

On Monday, the day after Signature Bank was shut down by the New York state chartering authority, prominent exchange Coinbase revealed the extent of its exposure to the bank and assured that its operations remained business as usual.

As of the close of business on Friday, March 10, Coinbase had approximately a $240 million balance in corporate cash at Signature. As stated by the FDIC, we expect to fully recover these funds.

— Coinbase (@coinbase) March 12, 2023

Over in the United Kingdom that day, British Finance Minister Jeremy Hunt announced that his ministry had brokered a bailout deal in which HSBC acquired the British arm of SVB for £1 to ensure British companies with exposure to the bank were fully protected.

This morning, the Government and the Bank of England facilitated the private sale of Silicon Valley Bank UK to HSBC.

Deposits will be safeguarded without any taxpayer support.

I stated yesterday that we’d take care of our tech sector, and we have worked urgently to fulfill that promise.

— Jeremy Hunt (@Jeremy_Hunt) March 13, 2023

Crypto journalist and podcaster Jason Yanowitz tweeted a list of alternatives to the two defunct banks.

Pass River has not hedged any of its HTM portfolios according to its own filings. An absolute disaster of a solution if I ever saw one.

The banking crisis news had self-proclaimed cypherpunk @dystopiabreaker placing the blame squarely on the government and their antipathy towards crypto.

“Because we personally don’t like their customers” isn’t a valid response to these questions.

— ⚡🌙 (@dystopiabreaker) March 13, 2023

Crypto venture capitalist Nic Carter, general partner at Castle Island Ventures, echoed the sentiment, using the words of Barney Frank, former American politician, Wall Street reformer, and Signature Bank board member.

Caitlin Long, founder of crypto bank Custodia, responded to a tweet by Forbes crypto analyst Jason Brett, joining the chorus of disgruntled crypto enthusiasts and accusing the Fed of hypocrisy and shady practices in their repeated rejections of her attempts to register her institution with them.

OH MY, THE CONTRAST—Fed voted down 100%-cash reserved @custodiabank and then days later voted for a bank bailout after two epic bank runs (as Fed Vice Chair for Supervision brags Fed-supervised banks are “well protected from bank runs” on the morning of the SVB bank run). Cannot make it up🤯

— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) March 13, 2023

Jessica Lessin, founder of tech publication The Information, was incensed by this piece of reporting on the SVB crisis by the Wall Street Journal. She’s right. It’s substandard.

For @wsj to mention flat out that SVB may have failed because they added non-white males to their board shows how far behind the times (and certifiably foolish) this publication truly is. It makes me so angry and very sad. WSJ readers and staff deserve better. pic.twitter.com/ppbcugJNhW

— Jessica Lessin (@Jessicalessin) March 13, 2023

By Thursday, it appeared that the widespread ire with U.S. regulators had spread as far as Europe.

BREAKING: Eu monetary regulators are “livid” on the

dealing with of Silicon Valley Financial institution

through US government.

Here is the modified paragraph while maintaining the word count and CPC value:

“They tore up the rulebook they helped write.”

A senior Eurozone official said the U.S. showed “total and utter incompetence.” pic.twitter.com/I9BxoUKLCd

— Mario Nawfal (@MarioNawfal) March 16, 2023

— Peter | פיטר | Tel Aviv Commodities (@TLVOilTrader) March 13, 2023

In other news, when it became apparent that Silicon Valley Bank was in hot water, before any word of top-down intervention, consumer sentiment towards USD Coin issuer Circle was rapidly declining. Last weekend, the dollar-pegged stablecoin actually depegged by 13 cents. At least one savvy trader worked the situation to their advantage.

On Monday, Stephane Kasriel, FinTech leader at Facebook and Instagram parent company Meta, announced the end of NFT integration across the company. What’s next? Will Meta abandon the metaverse pivot it has been so flamboyantly preparing for?

Some product information: around the company, we are closely examining what we prioritize to refine our focus. We’re winding down virtual collectibles (NFTs) for now to concentrate on other ways to support creators, individuals, and businesses. 🧵[1/5]

— Stephane Kasriel (@skasriel) March 13, 2023

Avalanche founder and CEO Emin Gün Sirer announced his new role as an advisor to D.C. regulators.

I am thrilled to have been appointed to the CFTC’s Technical Advisory Board. I will do everything I can to advance the space, inform regulators about the latest trends in crypto, and bring the benefits of blockchains to our financial system.

— Emin Gün Sirer🔺 (@el33th4xor) March 13, 2023

Jim Cramer’s financial advice made the rounds on Tuesday, primarily for its comedic value.

Coinbase’s Conor Grogan ran a smart contract through ChatGPT-4 and discovered a few vulnerabilities. Grogan is not the first, and he certainly won’t be the last.

I fed a live Ethereum contract into GPT-4.

Immediately, it highlighted several security vulnerabilities and identified areas where the contract could be exploited. It then demonstrated specific methods I could use to exploit the contract. pic.twitter.com/its5puakUW

— Conor (@jconorgrogan) March 14, 2023

Republican House Majority Whip Tom Emmer (R-MN) on Wednesday shared a letter he sent to the Federal Deposit Insurance Corporation, accusing the regulator of using the banking crisis to instigate a purge of crypto-friendly institutions.

Recently, I sent a letter to FDIC Chairman Gruenberg regarding reports that the FDIC is weaponizing recent instability in the banking sector to purge legitimate crypto activity from the U.S. 👇 pic.twitter.com/fDmaA0XGWv

— Tom Emmer (@GOPMajorityWhip) March 15, 2023

On Friday, Senator Elizabeth Warren tweeted some brazen and over-the-top anti-crypto rhetoric.

It’s no wonder the American people are skeptical of a system that keeps millions of struggling student loan borrowers in limbo but acts overnight to ensure that billion-dollar crypto companies won’t lose a dime in deposits.

— Elizabeth Warren (@ewarren) March 16, 2023

At the other end of the spectrum, pseudonymous Twitter financial commentator James Medlock and former Coinbase CTO and former Andreessen Horowitz partner Balaji Srinivasan are entering into a $1 million public bet over the possibility of U.S. hyperinflation and whether it could cause the price of Bitcoin to skyrocket.

I’m going to bet someone $1 million that the U.S. does not enter hyperinflation.

— James Medlock (@jdcmedlock) March 16, 2023

I can take that wager. You buy 1 BTC. I can send $1M USD. That’s ~40:1 odds as 1 BTC is worth ~$26k. The term is 90 days. All we need is a mutually agreed custodian who will still be there to settle this in the event of significant dollar devaluation. If anyone knows how to do this… pic.twitter.com/6Aav9KeJpe

— Balaji (@balajis) March 17, 2023

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