🥛 A major crypto bank has the plague...

PLUS: Funding Friday                                                                                                                                                                                                                                                                                                                                                                                                                 March 03, 2023 | [Read Online]( Gm. This is Milk Road, the tenderloin of crypto newsletters. Juicy, delicious, and no fat in sight. Here’s what we got for ya today: - WTF is up with Silvergate? - Will the Feds bring down the hammer? - Funding Friday! IS SILVERGATE NEXT TO FALL? Silvergate-gate is here, y’all: the crypto-friendly bank might be the next domino to fall. Silvergate’s stock plummeted ~60% on Thursday after the bank revealed it won’t be able to file its annual report with the SEC by the March 16th deadline. Why? Because it needs two extra weeks to assess all the damage to its finances caused by 2022’s crypto crash, as well as figuring out if it can even continue operating for the next 12 months. Uh-oh. Silvergate is one of the two big banks that strayed from conservative waters and started banking crypto exchanges and other crypto service providers over the last few years. If you’ve used FTX, Binance, or Coinbase, you’ve indirectly used Silvergate, which handles ~$11B in total assets. It's hard to overstate the impact that a Silvergate implosion could have on the crypto markets. Silvergate is a so-called “bridge” to crypto, with ~1,600 crypto clients that helped ~80% of all funds flow into and out of the digital asset markets. And if Silvergate does fail, it would also deal blows to established financial players like BlackRock, which has a large stake in the crypto bank. So… how did we get here? - Investors withdrew $8.1B from Silvergate after FTX, its client, blew up in November - To cover those withdrawn funds, the bank had to sell off debt at a $718M loss - It revealed a $1B loss for Q4 and a $949M loss for 2022 overall, versus a $76M profit for 2021 - Silvergate had to repay the $4.3B advance it got from the Federal Home Loan Bank (this is a new detail Silvergate gave in its [notice]( on Wednesday) - The DOJ is now probing Silvergate over its dealings with FTX/Alameda - And short sellers have now made Silvergate’s stock the most shorted stock in the country So what now? Institutional players are heading for the exits. [Coinbase](, [Galaxy Digital](, [Gemini](, [Circle](, [Crypto.com](, and [Paxos]( have already said they’ve cut ties with the bank. It’s safe to assume the rest of Silvergate customers will be scrambling to withdraw holdings as soon as they can. You’ve heard of the FTX saga; now get ready for the Silvergate saga. We will be keeping our eyes on this developing situation, more from crypto Twitter below: [tw profile: Cas Piancey] Cas Piancey @CasPiancey [tw] It’s hilarious to me that Silvergate, which has been around since 1987, went so hard into their crypto pivot that they’re literally like “we don’t have a business now that FTX is dead and regulators hate crypto” Mar 2, 2023 86 Likes 10 Retweets 8 Replies [tw profile: Adam Cochran (adamscochran.eth)] Adam Cochran (adamscochran.eth) @adamscochran [tw] Silvergate's death spiral is going to be rough for crypto. I don't think retail investors realize how much market maker money moved around quickly via SEN, and how many crypto exchanges were/are banking with them. Stock almost down to its ATL after hours. Mar 1, 2023 939 Likes 135 Retweets 77 Replies [tw profile: Avi] Avi @AviFelman [tw] (1) Today a great example of how Wall Street easily overexaggerate crypto stocks. Coinbase gapped lower ~10% today on the Silvergate news despite only using them as a smaller banking partner Mar 2, 2023 191 Likes 23 Retweets 7 Replies INVEST IN ON-CHAIN BONDS WITH OBLIGATE One of the biggest problems with running a company in a bear market is fundraising. And one of the biggest problems with investing in a bear market is finding good opportunities. Our buddies over at [Obligate]( are changing this. Obligate is a peer-to-peer on-chain marketplace for bonds. Obligate empowers companies to issue on-chain debt individual investors can invest in. Companies do it because it’s cheaper (80% cheaper than traditional fundraising) and faster. Investors do it because the target return is 7-12%. (Plus, the first 500 Investors who invest at least USDC 20,000 get 100 MATIC as a bonus.) Investors can pick any bond they want to go for. But hol’ up, how do you know these bonds are legit? - Borrowers are scored by Credora, a credit rating agency that uses real-time risk metrics. - The underlying collateral is managed by APEX Group, a globally active and renowned financial services provider. The company enforces the rights to the collateral and protects the interests of investors. - Smart contracts also go through a rigorous audit process by two reputable security firms, OtterSec and Sec3. Hit that button below to invest in exciting companies on Obligate. [I WANT TO INVEST IN ON-CHAIN BONDS]( Note that the Obligate Marketplace will open with its first opportunities on March 20th. Onboarding early is advised. WILL THE FEDS MAKE AN EXAMPLE OUT OF SILVERGATE? Lately, the Feds have been hard at work insulating TradFi from the crypto space: - Three big financial regulators warned banks in January that crypto risk shouldn’t be allowed to infect the banking system - The SEC wants to make it harder for crypto firms to hold client assets for money managers - The U.S. Federal Reserve said Nah to crypto firm Custodia’s request to access the central bank’s payment system Given all that, this would be brutal timing for Silvergate to collapse and for the crypto world to need someone to take its place. Silvergate was processing over $100B in transaction volume quarterly, which will now need to flow through other channels: (Credit: TheBlock.co) It will be hard to find a buyer or for another bank to step in. Everyone is spooked by the crypto space with the current regulatory threats, plus it has never been easy for the industry to find banking partners. The Milk Road Take: Even if the government can’t outright ban crypto, it can cut the industry off at its knees by making it harder to move fiat in and out of the space. If exchanges can’t find reliable banking partners, customers will have to jump through hoops to purchase crypto, which would be another hurdle standing in the way of mass adoption. This would be the crypto version of having to go to the ATM at the dispensary because they can’t accept your credit card. Womp womp FUNDING FRIDAY This week, $92.9M was invested in Web3 companies. Here’s who got the bag: [Factor got $7.5M to build DeFi infrastructure for asset managers, protocols, and investors](. Turning DeFi to WeFi. [NeoSwap got $2M to set up online parties for people to sell NFTs live](. 🎵No more parties in LA, please baby, we only party on blockchains.🎵 [insrt finance got $2.2M to build a protocol so anyone can own a fraction of a blue chip NFT](. NFT holders now can get returns for NFTs sitting in their wallets, and any Joe Shmo off the street can own a piece of a Bored Ape or Crypto Punk. [DigiFT got $10.5M to build a regulated DeFi solution for asset owners, issuers and investors](. Call ‘em the Gensler repellent. If you wanna see all the companies that got funded, check ‘em out [here](. MILKY MEME 🤣🤣 That's a wrap for today. Stay thirsty & see ya next time! If you want more, be sure to follow our Twitter [(@MilkRoadDaily)]( Share Milk Road You currently have 0 referrals, only 1 away from receiving The Next 10x Opportunity in Crypto for 2023. [The Next 10x Opportunity in Crypto for 2023]( [Click to Share]( Or copy and paste this link to others: [ HIT THE INBOX OF 250K+ CRYPTO INVESTORS Advertise with the Milk Road to get your brand in front of the Who's Who of crypto. The Roadies are high-income crypto investors who are always looking for their next interesting product or tool. [Get in touch today](. What'd you think of today's edition? - [🥛🥛🥛🥛🥛 F**king great]( - [🥛🥛🥛 Meh, do better]( - [🥛 You didn't bring the heat]( ROADER'S REVIEW VITALIK PIC OF THE DAY [tw profile: Milk Road] Milk Road @MilkRoadDaily [tw] Happy Friday lets get it! Mar 3, 2023 3 Likes 0 Retweets 0 Replies DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research. [tw]( [ig]( [yt]( [tk]( [in]( Update your email preferences or unsubscribe [here]( © Milk Road 603 Munger Avenue Suite 100 #1006 Dallas, Texas 75202, United States [[beehiiv logo]Powered by beehiiv](