We’re only in March but its Mayday mayhem in cryptoverse as the $$$ fell like toy soldiers. Three banks, each of whose name starts with a S for $, fell one after another in the span of just a few days. Buckle up Avocadians, as it's gonna be quite a rough ride which takes us right back to November 2022 when FTX went bust.

To recap, FTX’s collapse resulted in contagion effects that rippled across both the conventional and crypto financial markets. Silvergate Bank, which counted FTX as one of its major clients, was hit hard with losses of USD1.05 billion in the fourth quarter (Q4) of 2022. Since then, the share price of Silvergate Capital, which is the parent company of Silvergate Bank, has gone on a freefall.

Share Price of Silvergate Capital (Source: YCharts.com)

On 1 March 2023 which is the submission deadline for its annual 10-K report, Silvergate Capital announced that Silvergate Bank’s losses for Q4 2022 were much more than the reported USD1.05 billion. Consequently, Silvergate Bank had to restate its financial statements for Q4 2022. Alas, just a week later, Silvergate Capital issued an announcement in which it declared its “intent to wind down operations and voluntarily liquidate” Silvergate Bank “in light of recent industry and regulatory developments”.

Just three days after the fall of Silvergate Bank, Silicon Valley Bank (SVB) was shut down by the California Department of Financial Protection and Innovation amidst liquidity concerns about the Bank. Crypto-friendly SVB's customers' network included prominent crypto and NFT industry players such as Ripple, Yuga Labs and Circle which held USD3.3 billion of its USD Coin (USDC) reserves in the Bank. The news SVB's fall spooked crypto investors so much so that they withdrew about USD880 million worth of Bitcoins (BTCs) from exchanges on the same day.

BTC Withdrawals from Exchanges (Source: Messari.io)

Just one day after the fall of SVB, Signature Bank was shut down by the FDIC on the basis of a supposed need to “protect the U.S.' economy”. The FDIC claimed that Signature Bank posed a “systemic risk" to the country's economy. Among the affected crypto entities are crypto exchange, Coinbase and Pax Dollar (USDP) stablecoin issuer, Paxos whose exposure to Signature Bank stood at USD240 million and USD250 million respectively. Additionally, crypto lender Celsius also has an undisclosed exposure to Signature Bank.

Crypto Entities with Exposure to Signature Bank (Source: Coinpedia.org)

The first half of March 2023 has not been too kind on the crypto market as U.S.' regulators start to take a hard line on crypto-friendly banks. Whilst the future remains untold, one thing we know for certain is that crypto enthusiasts would be looking to recover some of their $$$ as the seasons in the cryptoverse change from winter to summer (soon).