The Real Reasons Silvergate Collapsed

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 10 March 2023

⏱️ 19 minutes

🔗️ Recording | iTunes | RSS

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Summary

Beleaguered Silvergate Bank has announced that it will be winding down. NLW examines whether the turn of events is due to banking crypto companies, specific business decisions made by Silvergate or a coordinated political campaign against the company. Enjoying this content? SUBSCRIBE to the Podcast Apple: https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M= Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW - “The Breakdown” is written, produced and narrated by Nathaniel Whittemore aka NLW, with editing by Michele Musso and research by Scott Hill. Jared Schwartz is our executive producer and our theme music is “Countdown” by Neon Beach. Music behind our sponsor today is “Foothill Blvd” by Sam Barsh. Image credit: Lerbank/ Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8. Join the most important conversation in crypto and Web3 at Consensus 2023, happening April 26-28 in Austin, Texas. Come and immerse yourself in all that Web3, crypto, blockchain and the metaverse have to offer. Use code BREAKDOWN to get 15% off your pass. Visit consensus.coindesk.com.

Transcript

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0:00.0	Welcome back to The Breakdown with me, NLW.
0:09.2	It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:15.3	The breakdown is produced and distributed by CoinDes.
0:20.4	What's going on, guys? It is Thursday, March 9th, and today we are discussing the real
0:25.6	reasons that Silvergate Bank collapsed. Before we get into that, if you are enjoying the
0:30.6	breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive
0:34.5	deeper into the conversation, come join us on the Breakers Discord.
0:41.4	You can find a link in the show notes or go to bit.ly slash breakdown pod.
0:43.7	All right, guys, well, it has happened.
0:49.0	As of last night, Silvergate Bank, one of the pioneers in giving crypto companies banking access,
0:50.8	is officially winding down.
0:54.6	Today we're going to deep dive on the closure and how we got here because I think the how is incredibly important. I think that there are three possible interpretations of this
0:59.2	whole affair. The first, let's call crypto risk. The idea that this was some inevitable byproduct
1:04.7	of bankers getting involved with the overly risky crypto sector. This you might sum up as the
1:09.1	Elizabeth Warren position. The second possible
1:11.7	interpretation is that Silvergate's failure wasn't strictly a byproduct of crypto risk, but had to do
1:16.4	with specific risks that Silvergate took in its business, in other words, specific business decisions
1:21.0	they made. The third, possible interpretation, is that this was a coordinated hit led by a combination
1:26.7	of short-sellers and antagonistic
1:28.3	politicians out for blood in the wake of the collapse of FTX. So keep those three possibilities
1:33.7	in mind as we dig into the story. On Wednesday, Silvergate Bank announced that it would, quote,
1:38.3	voluntarily liquidate its assets in wind-down operations. A press statement explained, quote,
	...

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