Crypto tidal wave: Silvergate and Binance, in the spotlight

The hangover from the FTX bankruptcy continues to rage on the crypto market. This time it was the turn of Silvergate, the cryptocurrency bank, which is on the brink of bankruptcy. But regulatory zeal also splashed Binancethe largest centralized broker in the world.

Silvergate is a key player in the industry, the bank that the large exchange houses turn to when they need to cover their liquidity needs in dollars. The entity said this Friday that it is studying the viability of its operations, after collapsing almost 60 percent on Wall Street.

FTX, the firm founded by Sam Bankman-Fried, was one of its main clients and Silvergate accused the coup, in what may be another new million-dollar bankruptcy in the crypto market.

The industry giant Coinbase it has already said that it will not transact with Silvergate. Galaxy Digital y Paxos they made the same decision, whileCircle (issuer of the USDC stablecoin) will restrict its operations. Fear spreads again like an oil stain

In this episode of ‘La Mina de finanzas.com’, Rafael Ares and Pepe Jimenez discuss the implications for investors of the Silvergate case.

Market places Silvergate in quarantine

Initially, Silvergate will not be able to send its results to the SEC, the regulator of US markets, on time. Some of the banks that hedge the stock, such as Morgan Stanley, removed the price target outright due to “elevated uncertainty”.

“The bank has been impacted by the bankruptcy of FTX, it is the dangerous domino effect that we have been talking about,” Pepe Jiménez recalled.

It is no longer just the hangover from FTX, because “they are going to investigate whether Silvergate could be involved in this collapse,” recalled Rafa Ares. For this reason, “many exchanges are already going out of business with Silvergate, so there is a knock-on effect that doesn’t look good,” she said.

What’s more, the Bitstamp broker did not mince words and made it very clear to its clients. Whoever puts their funds into Silvergate will do so at their own risk.

For crypto investors, this is not the best news. “You have to wait for more days of volatility if the bankruptcy really materializes,” said Jiménez.

Decibels rise with Binance

Before the Silvergate crisis broke out, the market had its own concerns with Binance. According to one information from Forbesthe exchange transferred $1.8 billion from its clients to hedge funds, without their authorization, the company denied.

Beyond was a group of US Senators led by Elisabeth Warren. “It is a hotbed of illegal financial activity,” the politicians accused after asking the company for information about its activities.

“What the senators are doing is asking Binance for explanations, but you have to wonder why they are doing it. The FTX issue scared all scales a lot and that is why they are taking extreme precautions,” said Pepe Jiménez.

It is true that this pressure can unleash more nerves in the market, especially for those who have Binance tokens in their portfolios. But there is also a positive reading. “It seems good to me that the regulators try to keep the sector as healthy as possible, even if this implies that there is more volatility,” argued Ares.

Keep in mind that Binance is the biggest giant in the industry, a full-fledged ‘too big to fail’. For this reason, “if it falls, it would affect us all,” argued Pepe Jiménez. Something only comparable to colapso de Lehman Brothers.

Solana polishes her flaws

Finally, Ares and Jiménez reviewed the latest Solana update, a technological change that promises to solve the great problem of this chain of blocks, its lack of stability.

“2023 is the year in which you want to completely end this stability problem,” Ares recalled, which is very important for this blockchain. It is the great ballast that weighs on Solana, the frequent falls.

“In terms of rates, Solana has no competition, so if they manage to make it more stable” much better, Jiménez pointed out.