Silvergate Bank crisis deepens with crypto clients fleeing
A wave of large crypto firms are suspending business with Silvergate Bank. The company’s share price dropped more than 50% on Thursday. Following a delayed filing on Wednesday, Silvergate Bank clients – including Coinbase, Paxos, Crypto.com, and more – announced immediate intentions to cease dealings with the beleaguered bank.
Software investment firm MicroStrategy announced via Twitter that the company has no financial connection to Silvergate Bank, other than a loan that the company claims it “wouldn’t accelerate b/c of [(Silvergate Bank’s] insolvency or bankruptcy.”
One notable holdout is Kraken, who instead ended some activity with Silvergate Bank’s rival Signature Bank.
We have a loan from Silvergate not due until Q1 ‘25. There are mkt concerns re SI’s fin. condition. For anyone wondering, the loan wouldn’t accelerate b/c of SI insolvency or bankruptcy. Our BTC collateral isn’t custodied w/ SI & we have no other financial relationship w/ SI.— MicroStrategy (@MicroStrategy) March 2, 2023
FTX shareholder report reveals ‘massive shortfall’ in assets
An FTX stakeholder report released Thursday shows a “massive shortfall” of assets across both the FTX and FTX.US platforms. The numbers presented reveal $2.2 billion in assets in associated wallets, of which only $694 million qualify as “Category A Assets,” which consist of fiat, bitcoin, ether and stablecoins.
While the exact amount owing by the company is unclear, FTX sister company Alameda research borrowed at least $9.3 billion from FTX wallets, and a report in January identified $7 billion in payables. FTX.US also reported a shortfall of $191 million in associated wallets.
US senators demand Binance execs hand over financials
Senators on the US Senate Banking committee took Binance and Binance.US to task in a Wednesday letter, requesting that CEOs Changpeng Zhao and Brian Shroder hand over their balance sheets for investigation. The senators assert that Binance’s dealings share commonalities with those of failed exchange FTX, particularly the relationship of between FTX and its sister firm Alameda Research.
A Binance.US spokesperson rebuffed the senators’ claims, stating, “We are confident in the strength of our operations, including our BSA/AML practices, broader compliance programmes, and policy of maintaining 1:1 reserves and never trading or lending out customer funds.” Binance recently came under fire when reports emerged that the company used Silvergate Bank to facilitate a transfer between Binance and Binance.US in 2021.
We are confident in the strength of our operations, including our BSA/AML practices, broader compliance programmes, and policy of maintaining 1:1 reserves and never trading or lending out customer funds
Ripple Labs CEO speaks out ahead of ‘pivotal’ verdict
Ripple Labs CEO Brad Garlinghouse has labelled the upcoming verdict in the Securities and Exchange Commission’s case against the company as “pivotal for the whole industry.” Garlinghouse also claimed that the SEC’s calls for crypto companies to register with the agency are disingenuous, as SEC approval is nearly impossible to attain.
The SEC sued Ripple Labs in 2020, alleging that the company failed to register Ripple’s coin XRP as a security, and that it did not meet disclosure requirements. The case’s verdict is expected later in 2023. It will be the first significant ruling related to the SEC’s industry-wide effort to designate most digital assets as securities.
UK banks tighten retail crypto purchase rules
UK banks are limiting retail customers’ crypto access as regulators warn of forthcoming legislation. HSBC and Nationwide have banned customers from using credit cards to purchase crypto. Nationwide also applied a new daily limit of £5,000 on debit crypto purchases. HSBC cited warnings from the UK’s Financial Conduct Authority, with “risk to customers” to justify the new restrictions.
Banks and financial bodies worldwide have rolled out a smattering warnings lately. Global entities such as the International Monetary Fund, the Financial Action Task Force and the Financial Stability Board have all recently taken strong stances on the risks posed by crypto.
Ethereum developers reveal new token standard at WalletCon
Developers and enthusiasts of Ethereum may feel a twinge of relief amidst the industry clamour as developers surprised the community with a new type of token standard. They unveiled the ERC-4337 standard at ETHDenver’s WalletCon event on Wednesday.
The new standard enables “account abstraction,” a long-sought functionality that allows crypto wallets to do a variety of new things such a letting wallets operate as smart contracts. This will enable developers to add new features to wallets, such as private key recovery by way of two-factor authentication.
The ERC-4337 was proposed by Ethereum co-founder Vitalik Buterin and others in 2021.
Great news!— Professor John Keeting (@ProfKeeting) March 2, 2023
"Account Abstraction" (ERC-4337) is here and it will change and improve wallet handling a lot: wallets without seed phrases, account recovery, transaction limits, and many other great features are now possible.
Here is a simplified overview of how it works. pic.twitter.com/heySmUo43t
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