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Silicon Valley Bank CEO slammed for ‘stupid’ strategy

Silicon Valley BankThe initial distress of the SVB collapse has passed out, and people are looking for someone to blame.

Silicon Valley Bank CEO Greg Becker is being blamed by the tech industry.

Many people hold Becker responsible for the corporation’s standing as the second-largest American financial disaster in history.

According to an alleged SVB employee, Becker openly acknowledged the bank’s financial difficulties before secretly offering cash aid to weather the storm.

As a result of the actions, many withdrew their money, creating a scared atmosphere.

“That was absolutely idiotic,” said the employee. “They were being very transparent.”

“It’s the exact opposite of what you’d normally see in a scandal. But their transparency and forthright-ness did them in.”

The buildup

Last Wednesday night, Greg Becker and his leadership team stated that they expected to raise $2.25 billion in cash from $21 billion in asset sales, resulting in a $1.8 billion loss.

SVB has failed to make any definite commitments, despite its best efforts.

The announcement jolted Silicon Valley, where the bank has been a key lender to tech entrepreneurs.

Several entrepreneurs were worried.

Many firms withdrew $42 billion on Thursday, according to California regulator data, while Silicon Valley Bank’s shares plunged 60%.

Silicon Valley Bank had a negative cash position of around $958 million when it ended that day.

“People are just shocked at how stupid the CEO is,” said the SVB employee.

“You’re in business for 40 years and you are telling me you can’t raise $2 billion privately? Get on a jet and fly to Kuwait like everyone else and give them control of one-third of the bank.”

The CEO of Silicon Valley Bank, Greg Becker, is said to have apologized to staff in a video statement.

“It’s with an incredibly heavy heart that I’m here to deliver this message,” said Becker.

“I can’t imagine what was going through your head and wonder, you know, about your job, your future.”

Read also: Silicon Valley Bank collapsed, crypto space affected


According to Jeff Sonnenfeld, CEO of Yale School of Management’s Chief Executive Leadership Institute (CELI), Silicon Valley Bank officials deserve to be chastised for their “tone-deaf, mismanaged execution.”

Sonnenfeld and CELI’s research director, Steven Lian, declared in a joint statement:

“Someone lit a match and the bank yelled, ‘Fire!’ – pulling the alarms in earnest out of genuine concern for transparency and honesty.”

Sonnenfeld and Tian stated on Wednesday night that publicizing the $2.25 billion unsubscribed capital offering was unnecessary.

They stated that Silicon Valley Bank has adequate capital to meet regulatory standards.

They also claimed that disclosing the $1.8 billion gap was unnecessary.

According to Sonnenfeld and Tian, the one-two punch created a tremendous frenzy, culminating in a rush to withdraw deposits.

They suggested that the bank may have separated the statements by at least one or two weeks, therefore lessening the impact.

President Joe Biden’s administration launched a proposal to help Silicon Valley bank clients on Sunday.

Biden also stated that the US government will properly investigate all parties involved in the SVB disaster.

He released a statement saying:

“I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”

The Fed’s involvement

Jerome Powell, the Chairman of the Federal Reserve and Biden’s choice to lead the Feds, and his colleagues, according to Jeff Sonnenfeld and Steven Lian, carry part of the blame.

“There should be no mistaking that Silicon Valley Bank’s collapse was a direct result of the Fed’s persistent and excessive interest rate hike,” they wrote.

According to them, the Fed’s attempts to decrease inflation had two impacts:

  • The value of the bonds Silicon Valley Bank was relying on for capital
  • The value of the tech startups SVB catered

Silicon Valley Bank, on the other hand, had more than a year to plan for and address the difficulties.

The unidentified SVB employee referred to the bank’s balance-sheet manipulation as “stupidity,” calling the CEO and CFO’s plan into question.

But, the employee, who is also a Wall Street veteran, feels the bank’s demise was due to errors and “naivety” rather than unlawful activities.

“The saddest thing is that this place is Boy Scouts,” they said.

“They made mistakes, but these are not bad people.”

Image source: The Business Journal

Coinbase stock price jumps after settlement

Image source: Fintech Magazine

Coinbase: The cryptocurrency exchange site Coinbase had a sharp increase on Wednesday.

Following a $100 million settlement with the New York Department of Financial Services, the exchange’s stock price rose.

Following the agreement, COIN, which is listed on the Nasdaq Composite, was up more than 12% and was trading at $37.34 per share.

The settlement

Issues with the company’s compliance programs were settled between the company and the New York Department of Financial Services.

The cryptocurrency exchange must therefore pay a $50 million fine as a result.

Coinbase must also invest an additional $50 million to improve its capacity to adhere to financial regulations, such as transaction monitoring and KYC requirements.

The New York Banking Law and state rules surrounding the following were broken by the company, according to the Department of Financial Services, which said it failed to comply with a program.

  • Cybersecurity
  • Money transmitting
  • Transaction monitoring
  • Virtual currencies

Company vulnerability

The NYDFS claimed that Coinbase’s compliance program had issues that left it open to the following risks:

  • Activities related to narcotics trafficking or child sexual abuse material
  • Fraud
  • Money laundering

The Superintendent of Financial Services, Adrienne A. Harris, stated:

“It is critical that all financial institutions safeguard their systems from bad actors.”

“Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth.”

The NYDFS asserted that the business has already begun to enhance its practices.


Coinbase’s treatment of the KYC rule and customer due diligence requirements was deemed by New York regulators to be a “check-the-box” activity.

The exercise was also deemed to be insufficient.

The department also learned the company has a sizable backlog for keeping an eye on suspicious transactions.

By the end of 2021, there were more than 100,000 unreviewed alerts.

As a result, some of the transactions that Coinbase highlighted weren’t examined for several months.

The NYDFS installed an independent monitor at the beginning of 2022 as a result of the company’s failure.

In order to resolve concerns with the company’s procedures, the monitor assessed the company’s compliance program.

The monitor will continue to work with Coinbase for an additional year as part of the settlement.

Read also: Jon Tester, US Senator, still dismissive of crypto

Price jump

Investors who now have a good understanding of the company’s regulatory issues are likely to have contributed to the surge in Coinbase stock’s (COIN) price.

The NYDFS inquiry was first mentioned by the cryptocurrency exchange platform in a late 2021 SEC report as a potential risk to its business operations.

But the regulator’s most recent statement effectively put an end to the matter.

SEC investigation

Despite the good news, an SEC inquiry against Coinbase is still imminent.

A probe into whether the SEC should permit Americans to trade digital assets that ought to have been registered as securities was launched against the corporation in July 2022.

A past insider trading case involving a former Coinbase employee who was suspected of breaking the company’s insider trading policies provides the basis for the current investigation.

The former worker allegedly told his brother and a friend about impending token listings, according to the accusation.

The agency discovered that the accused traded the following tokens:

  • AMP (AMP)
  • Rally (RLLY)
  • DerivaDEX (DDX)
  • XYO (XYO)
  • Rari Governance Token (RGT)
  • LCX (LCX)
  • Powerledger (POWR)
  • DFX Finance (DFC)
  • Kromatika (KROM)


In April 2021, the exchange platform for cryptocurrencies first went public.

It joined the US stock exchange as the country’s first significant cryptocurrency startup.

At the time, the cryptocurrency market was booming, with trades for Bitcoin reaching $63,000.

People consequently developed an interest in investing in cryptocurrencies.

COIN made its debut for an incredible $381, which was 52% more expensive than its $250 reference price.

But a sudden crypto and stock market collapse occurred in 2022.

Crypto ventures, businesses, and almost every coin’s price on the market were decimated by the severe bear market.

Since that time, COIN’s value has decreased considerably, plummeting 90% from the time it was first launched.


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