Ripple CEO Brad Garlinghouse took to Twitter to address concerns about the company’s exposure to Silicon Valley Bank (SVB), which was recently shut down by regulators. Garlinghouse reassured investors that Ripple, which held some of its cash balance with SVB, does not anticipate any disruption to its business and has already diversified its network of bank partners to minimize the impact of the closure. He added that Ripple remains financially strong despite the recent events.
Garlinghouse Highlights Broken Financial System
In a separate tweet, Garlinghouse noted the irony of the current financial system as some companies scramble to make payroll in the aftermath of the Silicon Valley Bank closure. He pointed out that wires are still not operational 24/7/365, rumors can lead to panic and collapse, and the fragmented system hinders the movement of money. Garlinghouse’s comments reflect the broader systemic issues that contribute to financial instability and the need for modernization.
SVB Shutdown Shocks Tech Industry
Regulators recently closed Silicon Valley Bank, the largest bank failure since the 2008 financial crisis, causing shockwaves across the tech industry. The bank’s failure followed its announcement of plans to raise up to $1.75 billion in capital to strengthen its books, which triggered a rush by customers to withdraw their funds. Bloomberg News reported that more than 93% of the $161 billion deposited at Silicon Valley Bank was not insured by the FDIC.
FDIC Takes Unprecedented Action
The Federal Deposit Insurance Corporation (FDIC) created a National Bank of Santa Clara to hold deposits and other assets of the failed Silicon Valley Bank. This move surprised industry analysts as the FDIC typically announces bank closures after the stock market closes on Fridays to limit the damage to customers. While customers of FDIC-regulated banks are insured up to $250,000 per account, some businesses and individuals with millions of dollars deposited at Silicon Valley Bank may receive little or no refund.
