Just-In: SEC Chief Gary Gensler Blames Crypto For Silicon Valley Bank Collapse

Pratik Bhuyan
April 18, 2023
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sec chief gary gensler

The chair of the Securities and Exchange Commission, Gary Gensler, was questioned by the Republicans in the House over his agency’s treatment of digital assets, including the lack of clarity around whether or not ether is a security, the regulations regarding stablecoins, and the agency’s treatment of FTX. However, while speaking on Silicon Valley bank’s abrupt collapse, the SEC chief pointed fingers at crypto, blaming it being the primary reason why the financial behemoth was forced to declare bankruptcy.

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Gensler Links Banking Crisis To Crypto

When asked about his stance on the banking crisis faced by the country and the SEC’s incompetence in mishandling the crisis prior to happening, Gensler linked the banking debacle with their client partnerships involved in the crypto industry. In addition, he claimed that the banks suffering the meltdown had exceptionally high exposure to cryptocurrencies, either through client funds or facilitating payments for crypto firms such as digital asset exchanges.

Read More: U.S. House Committee Proposes New Crypto Legislation With One Key Distinction

Gensler had previously highlighted SVB’s dramatic implosion as “a reminder of the importance of these resiliency projects for everyday Americans”, hitting at crypto firms allegedly being non-compliant and failing to register with the agency.

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The U.S. Banking Fiasco

SVB, which was the 16th-largest bank in the country, was shut down after failing to fully insure against the rising interest rates. The turning point for the company occurred when SVB revealed that it had sold $21 billion worth of its securities at a loss of around $1.8 billion and that it needed to raise an additional $2.25 billion to fulfill the withdrawal needs of customers.

This announcement led to a surge of withdrawals from venture capitalists and other depositors, which sparked a panic-induced downward spiral for the stock price. Within a single day, shares of SVB fell by nearly 70% and contributed to a loss of more than eighty billion dollars in bank shares around the world.

Also Read: Is Coinbase Next After Bittrex? Former US SEC Official Makes Shocking Prediction

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Pratik has been a crypto evangelist since 2016 & been through almost all that crypto has to offer. Be it the ICO boom, bear markets of 2018, Bitcoin halving to till now - he has seen it all.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.