For cryptocurrency investors, a bank account is essential because people still make payments with cards in the real world. Therefore, crypto companies and ventures need to make agreements with banks. However, the number of banks willing to work with crypto companies is not as high as expected. It used to be much more limited.
Silvergate and SEC Lawsuit
According to a Bloomberg report, the SEC filed a lawsuit against the bankrupt Silvergate Bank in Federal Court. The extent to which the lawsuit, filed on charges of securities fraud, will affect crypto is uncertain. The bank, which primarily worked with crypto companies, experienced a bank run and went bankrupt during last year’s chain bankruptcies.
Some US politicians blamed the volatility in crypto for the bank’s bankruptcy. However, we also saw that banks not connected to crypto failed because they couldn’t cover bond discounts due to the Fed’s rapid interest rate hikes. To prevent these bankruptcies from growing, the Fed took action and started pumping liquidity into the banks.
The bank was closed on March 12, 2023. During those days, when we saw three crypto-friendly banks collapse simultaneously, there were also significant declines in crypto. Now, if this investigation is prepared in connection with the crypto companies that worked together, we might see a drop in BTC prices. However, the anticipated scenario is that the only party involved here is the bank. We mentioned above that non-crypto-friendly banks also struggled to respond to cash demands from customers due to discounts.
In summary, although this latest development may cause a temporary psychological drop, if it is seen that the lawsuit details are not related to crypto, it could reverse BTC. For now, BTC has experienced a slight drop. As a small note, it should be mentioned that there is a possibility that either scenario regarding the connection to crypto could occur in the lawsuit details.
Update: The lawsuit is related to the role the bank played during the FTX collapse. Although there are accusations against the executives, the complaint file does not contain comprehensive information.
