SNEAK PEEK
Ripple Labs, the company behind XRP cryptocurrency, had some exposure to Silicon Valley Bank (SVB).
Ripple CEO Brad Garlinghouse noted that Ripple remains in a strong financial position and expects no disruption to its business.
FDIC has announced a $25 billion funding package to help SVB with liquidity issues.
The collapse of Silicon Valley Bank (SVB) on Friday has raised concerns among some investors of Ripple Labs, the firm behind the XRP cryptocurrency. However, Ripple CEO Brad Garlinghouse has assured them that the company is not affected by the bank’s failure and that it remains financially stable.
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
In a series of tweets on Sunday, Garlinghouse said that Ripple had some funds in SVB but that it did not rely on the bank for its daily operations. He said that Ripple had already diversified its cash holdings among a wider network of bank partners and that it expected no disruption to its business.
Garlinghouse further added that the situation with SVB was still unclear and that he hoped to get more information soon. He ended his tweets by saying that Ripple was in a strong financial position and that investors should not worry. However, Garlinghouse did not reveal how much of the company’s funds were held with SVB.
Most of the Twitter users who commented on the thread supported Garlinghouse’s viewpoint, with one user stating, “I never doubted you or @Ripple to have taken proper risk management.”
Ripple is one of the many crypto companies that had ties to SVB, which was one of the biggest banks in the US and a major lender to the tech sector. The bank collapsed on Friday after a large number of depositors withdrew their money, fearing that the bank was insolvent due to rising interest rates and a falling bond market.
Following the collapse, the Federal Deposit Insurance Corporation (FDIC) took control of the bank and announced a $25 billion funding program to help other banks with liquidity issues. The FDIC also said that all SVB depositors would be able to access their money starting Monday and that the taxpayer would not incur any losses from the bank’s resolution.
Meanwhile, Ripple CTO David Schwartz had previously expressed his puzzlement about how a bank run could cause a bank to become insolvent. He argued that if the bank was solvent before, that meant it had more assets than liabilities and that it would have regained its solvency as its long-term bonds matured.