Crypto company deathwatch thread

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Look, I fully realize I will eat a lot of shit if USDC (circle) dies but in my defense, of all the things killing a crypto, a US regulated bank going under wasn't on anybody's bingo card.

Looks like Circle is out 3 bil

db (@tier10k)

[DB] Circle: $3.3 Billion at SVB
nitter.net nitter.net
 
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Nol 2 said:
Look, I fully realize I will eat a lot of shit if USDC (circle) dies but in my defense, of all the things killing a crypto, a US regulated bank going under wasn't on anybody's bingo card.

Looks like Circle is out 3 bil

db (@tier10k)

[DB] Circle: $3.3 Billion at SVB
nitter.net nitter.net
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USDC (Circle) depegged some hours ago. Coinbase and Binance stopped USDC-USD conversion.

Screenshot_20230311_120059.jpg
Binance will open USDT/USDC pair @ 14:00 UTC today. [announcement]
 
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Coinbase was always tied in tight with USDC since it was created. They supposedly have around 2 billion dollars worth of it on their books. It will wound them if USDC/Circle outright fails. Probably not fatal, but very damaging.

The bigger problem is that losing their 24/7 window into the US banking system is going to destabilize trading on all the crypto exchanges. Trading is going to be far less smooth than it used to be.

But there are other problems. The two bank failures highlighted a systemic problem in the banking system. Bank reserves are loaded up with bonds whose liquidation value has been falling as interest rates rise. The banks have been playing games with how they value those bonds on their books. Worse yet, some banks didn't hedge their interest rate risk at all. What started at the two banks this week could happen at other banks in the near future.
 
Strix454 said:
The two bank failures highlighted a systemic problem in the banking system. Bank reserves are loaded up with bonds whose liquidation value has been falling as interest rates rise. The banks have been playing games with how they value those bonds on their books. Worse yet, some banks didn't hedge their interest rate risk at all. What started at the two banks this week could happen at other banks in the near future.
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For anyone not around during 2008, this is incredibly similar to what happened then. Add in interbank loans (because obviously banks don't go under so that is thought to be minimal risk) which failures will cascade through the system.

Will be intresting to see if USDC reclaims its peg. Losing it isn't a big deal. Not reclaiming it (and just checked, its back to .94) is a deathknell.
 
It feels like a millennia ago that the XRP court case started and I don't believe it will ever be concluded. The whole thing just feels like white noise at this point. The only crypto I have now is XRP and BTC, I might check my wallet in ten years time or something, maybe I'll have made a few dollars.
 
Strix454 said:
Coinbase was always tied in tight with USDC since it was created. They supposedly have around 2 billion dollars worth of it on their books. It will wound them if USDC/Circle outright fails. Probably not fatal, but very damaging.

The bigger problem is that losing their 24/7 window into the US banking system is going to destabilize trading on all the crypto exchanges. Trading is going to be far less smooth than it used to be.

But there are other problems. The two bank failures highlighted a systemic problem in the banking system. Bank reserves are loaded up with bonds whose liquidation value has been falling as interest rates rise. The banks have been playing games with how they value those bonds on their books. Worse yet, some banks didn't hedge their interest rate risk at all. What started at the two banks this week could happen at other banks in the near future.
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The Bond Market is a huge issue. The Banks are using Bonds as assets on their books to meet reserve requirements. This may be a case of the Crypto Economy being 8 weeks ahead of the regular economy again.

The number of accounts back by Bonds depreciating in value is quite frankly terrifying. The Fed may have no choice but to stop raising rates to stabilize the bond market and allow inflation free reign again.
 
General Emílio Médici said:
There is something very ironic about a Crypto coin losing it all because the leverage was in a regular bank with regular FIAT money lmao.

What about Binance and BUSD? Are the fundus safu?
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There are two kinds of BUSD. One (BEP20 token) is 100% shitcoin, other (ERC20 token, backed by Paxos) is better but was recently shoah'd by one of three-letters (SEC or DOJ, I think), because Binance was equating these two tokens in its marketing and financial statements.
 
Is it retarded to short USDC? because I am doing it, I'm betting on the conspiracy that USDC is going to zero to justify regulation for stablecoins and coinbase should suck my balls and give me money.
 
Delusion said:
Is it retarded to short USDC? because I am doing it, I'm betting on the conspiracy that USDC is going to zero to justify regulation for stablecoins and coinbase should suck my balls and give me money.
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Probably. Everyone and their mother is buying USDC right now expect it to regain the peg. Oddly enough this FOMO will probably be enough to bring it back to 1 USD. Remains to be seen what happens at that point, but with the major exchanges allowing you to buy but not sell USDC I expect they will be able to right the ship unless something bad happens on monday
 
mindlessobserver said:
Probably. Everyone and their mother is buying USDC right now expect it to regain the peg. Oddly enough this FOMO will probably be enough to bring it back to 1 USD. Remains to be seen what happens at that point, but with the major exchanges allowing you to buy but not sell USDC I expect they will be able to right the ship unless something bad happens on monday
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Don't even need fomo, Circle said they would defend the peg. Seeing as all the controls they have over USDC, not surprised at all
 
This is incredible to watch in real time. I was under the impression a bank no matter how bad it was could go to the Fed Reserve discount window and get bailed out.
The whole reason for these silly stable coins was to execute trades pegged to the dollar at the same rate of the dollar, while avoiding the regulation. This seems like a controlled total crypto death war by J Powell on crypto bro's. On/Off ramp's are being blocked, so yeah Monday is going to be interesting.
 
Fascist Kirk said:
This is incredible to watch in real time. I was under the impression a bank no matter how bad it was could go to the Fed Reserve discount window and get bailed out.
The whole reason for these silly stable coins was to execute trades pegged to the dollar at the same rate of the dollar, while avoiding the regulation. This seems like a controlled total crypto death war by J Powell on crypto bro's. On/Off ramp's are being blocked, so yeah Monday is going to be interesting.
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I think, if the fed lets SVB fail we will have many more much interesting questions. Questions like : If you have north of 250k cash on and bank failure is a reasonable counter party risk why would you keep more than 250k in the bank? What exactly is the point of having all these banking regulations if a solvent bank can get shut down and the customers have to eat a haircut? Why would anyone bother banking with any one that isn't comfortably "too big to fail"? Exactly how fast can you get hundreds of thousands of dollars out of a bank at any given time?

Theres a reason why the VC guys are losing their shit about this, and it isn't just because they are all liable to take a massive haircut: SVB was a much more traditional bank. It wasn't a Lehman Bros or Bear Stearns built to play the stock market. The fact that its a question of "Will my traditional bank run the risk of taking my company cash reserves to 0" is horrifying possibility.

The only bright side is, if they fuck this up and choose the wrong option, they are picking a fight against some of the most well funded people in the country.
 
Nol 2 said:
I think, if the fed lets SVB fail we will have many more much interesting questions. Questions like : If you have north of 250k cash on and bank failure is a reasonable counter party risk why would you keep more than 250k in the bank? What exactly is the point of having all these banking regulations if a solvent bank can get shut down and the customers have to eat a haircut? Why would anyone bother banking with any one that isn't comfortably "too big to fail"? Exactly how fast can you get hundreds of thousands of dollars out of a bank at any given time?

Theres a reason why the VC guys are losing their shit about this, and it isn't just because they are all liable to take a massive haircut: SVB was a much more traditional bank. It wasn't a Lehman Bros or Bear Stearns built to play the stock market. The fact that its a question of "Will my traditional bank run the risk of taking my company cash reserves to 0" is horrifying possibility.

The only bright side is, if they fuck this up and choose the wrong option, they are picking a fight against some of the most well funded people in the country.
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Its part of the Debt debacle, the problem with socialism and the federal reserve. Rates will go north of 6% on the fed funds rates, the national debt will soon surpass GDP to just service the interest, not the principle. Who is going to eat the bullet? traditionally its the poor and middle class.

If you have over 250k sitting in a bank, thats fuck you money and you deserve to loose it. I have not had one good thing to say about the Joe biden presidency except maybe this. If the rich get to feel what the working class felt in 2008 way to go, I know My 401k after the first qe1-3 has yet to recover. So if oprah and the merkels, or god forbid a crypto bro feel some pain, well welcome to the club.
 
I'm not so worried about the crypto or tech bros, rather the mid tier business payroll and AR accounts. 250k is a lot to a person. That is a bi-weekly payroll bill to a 100 person company at the average (70k) US salary. Its about what an average McDonalds pulls in a month.
 
And my heart goes out, while I play the worlds smallest Violin for the silicon valley Mc Donalds Employee who did not recieve his 600 dollar weekly pay check. but maybe god willing in the aftermath we have a better world. Perhaps Jose' recognizing janitor at Mcdonalds pays less than picking Orchards in mexico and moves back home.

Maybe Mcdonalds franchise goes under and a whine mom has to cook her kids a real meal. McDonalds has been out of Russia for nearly a year, and they seem to be winning a war ......... Maybe Powel has a plan maybe its working ....

Silicon Valley Bank bank rolled stable coins, if Circle and Crypto was so stable so secure, so independent such an alternative to the traditional banking system, why do they crash 7 percent when the 16th biggest bank fails? Keep winning crypto Bro's!
 
Fascist Kirk said:
This is incredible to watch in real time. I was under the impression a bank no matter how bad it was could go to the Fed Reserve discount window and get bailed out.
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The discount window can bail banks out of liquidity problems (i.e. give them time to sell something) but it can't bail them out of a solvency problem. The reserves of these banks were in long-term bonds and bank regulators allow an accounting trick where a bank can assign a false non-market value to the bonds on the assumption that the bank will hold them to maturity.
But if the bank is forced to sell the bonds, the accounting trick ends, the bank's reserves end up in reality being a fraction of what they were on paper and the bank has to shut down.

Fascist Kirk said:
The whole reason for these silly stable coins was to execute trades pegged to the dollar at the same rate of the dollar, while avoiding the regulation. This seems like a controlled total crypto death war by J Powell on crypto bro's. On/Off ramp's are being blocked, so yeah Monday is going to be interesting.
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Not a total crypto death war. Just the death of all crypto outside the US regulatory system. They have already picked a winner in ethereum and brought it within the "family".

And you are correct. Most of what Crypto evolved into over the last few years has been a system by which people can avoid the regulations in the banking system.
 
mindlessobserver said:
Probably. Everyone and their mother is buying USDC right now expect it to regain the peg. Oddly enough this FOMO will probably be enough to bring it back to 1 USD. Remains to be seen what happens at that point, but with the major exchanges allowing you to buy but not sell USDC I expect they will be able to right the ship unless something bad happens on monday
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well it just briefly hit 99 cents, I am down $500, I'll see what happens tomorrow. I am thinking its over, but we will see.
 
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