Ripple CEO Brad Garlinghouse addressed his company’s exposure to the failed Silicon Valley Bank (SVB) in a Twitter thread on March 12 that was directed to his 700,000 followers. In the thread, he emphasized (1) that Ripple remains financially stable despite the risk.
The executive pointed out that although Ripple has exposure to SVB as a banking partner, “we expect NO impact to our day-to-day business, and already held a bulk of our USD with a broader network of bank partners.”
Setting the record straight on SVB Qs:
Ripple had some exposure to SVB – it was a banking partner, and held some of our cash balance. Fortunately, we expect NO disruption to our day-to-day business, and already held a majority of our USD w/ a broader network of bank partners.
— Brad Garlinghouse (@bgarlinghouse) March 12, 2023
Garlinghouse reassured investors that day-to-day activities at Ripple would continue unabated even though the company’s cash was held with the other financial partners.
In addition to this, he mentioned that the current financial systems are dysfunctional because of their high susceptibility to rumors, which is demonstrated by the current banking collapse.
People React
Mixed reactions were received from the community in response to the tweet. Some users expressed thanks for the announcement, and others voiced concerns regarding the funds Ripple had kept with the failed bank.
After an earlier promise made by Ripple’s chief technical officer, David Schwartz, on March 11 that the company would provide a statement regarding the issue, the company has now issued the tweet in question.
It is unclear whether this was in response to the tweet Garlinghouse sent out earlier. The CEO of SVB did not disclose the amount of money that was held up in the bank.
On Friday, March 10, SVB, the most important bank for technology startups, was brought to its knees by withdrawals totaling at least $42 billion. This led to the bank’s failure.
The bank stated on Wednesday announcing that it was aiming to raise $2.5 billion in order to shore up its financial statement, which appears to have been the catalyst for this.
On Sunday, the United States Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation closed down another cryptocurrency-friendly bank. This time it was the New York-based Signature Bank (2).
The FDIC is now in charge of managing the assets that were left over from SVB. The bankruptcy of this bank, which is the second-largest in the history of the United States after the global financial crisis of 2008, is causing regulators to consider taking action to stop it from getting any worse.
During this time, the Federal Reserve stated that it had established a fund with a capacity of $25 billion to provide liquidity assistance to financial institutions when they are experiencing difficulties.
Silicon Valley Bank Customers to Get Access to their Accounts
In addition, it was stated that all customers of Silicon Valley Bank will gain access to all of their accounts beginning on Monday, March 13, and that “the taxpayer will not be responsible for any damages linked with the settlement of Silicon Valley Bank.”
As stated by a senior Treasury official, however, equity and bondholders at SVB & Signature Bank are having their holdings completely wiped out.