Lately, the news concerning cryptocurrencies tends to lean negative. Reportedly, Signature Bank, now in receivership, had a strong association with crypto. Before that, CNN/Business reported on an entity named Silverlake going under:
Crypto-focused lender Silvergate said it is winding down operations and will liquidate the bank after being financially pummeled by turmoil in digital assets.
“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward,” it said in a statement Wednesday.
The bank’s plan includes “full repayment of all deposits,” it said.
Silvergate’s collapse is a rare example of crypto’s volatility spilling into the mainstream banking system. The bank is a traditional, federally insured lender that positioned itself as a gateway to the digital asset space. …
“The problems that faced Silvergate were primarily a result of less-than-adequate risk management, notably one of relying too much on volatile short-term deposits while lending or investing at a longer duration,” [Dave Weisberger, the CEO of CoinRoutes] said. “This is not like the collapse of FTX, where investors lost their deposits, but, rather, an orderly dissolution.”
Which suggests either Silverlake’s management was inexperienced and not up to the task, or that managing a bank with an exposure to crypto is a horrendous task. On that matter I have no insight, but I suspect the latter, since crypto, despite the bombast, remains a new entity with unknown attributes.
And now there’s news on crypto-connected fraud from Egypt via AL-Monitor:
Egyptian authorities have succeeded this month in partially unraveling one of the largest cases of online fraud in the country to date by arresting the members of a network that established a fake digital currency platform and deceived thousands of people into readily handing over their life’s savings.
The network was made up of 29 people, including 13 foreign nationals, according to the Egyptian Interior Ministry.
They established the fictitious HoggPool crypto mining platform and lured users by promising them high returns for their investments, stealing 19 million Egyptian pounds ($615,000) from them, the ministry said in a statement released last week.
From the article, it sounds like a familiar Ponzi scheme in which early “investors,” few in number, profit at the expense of later rounds of investors, as the latter pay the former via those responsible for the scheme. But why are Egyptians taking such risks as believing in crypto?
[Due to Putin’s War, ] The central bank has depreciated the Egyptian pound several times since early 2022, causing the pound to lose almost 50% of its value against foreign currencies, doing away with the savings of millions of Egyptians and partially contributing to making the prices of commodities tower over the money in people’s hands, regardless of its amount.
To protect their savings, Egyptians are putting their money in anything that seems profitable, from real estate to vehicles and gold. And some put their savings into digital currencies, too, trying to achieve easy and quick profits.
In a world heavily dependent on trade, a little war over here can induce uproar halfway around the globe. And so do the vulnerable suffer some more.
