After getting shut down by regulators on Friday, Silicon Valley Bank got hit with the first shareholder lawsuit alleging the company committed fraud and “mismanaged events” leading up to the collapse. The suit is also targeting the bank’s parent company, as well as its CEO and CFO accusing them of concealing risks arising from FED’s aggressive rate hikes.
SVB Struck With Shareholder Lawsuit
According to a report from Monday, March 13th, the Silicon Valley Bank recently became the target of a shareholder fraud lawsuit. The suit, the first since the bank was closed last Friday, is targeting SVB, its CEO and CFO, and the bank’s parent company accusing them of fraud and alleging they concealed risks arising from FED’s successive interest rate hikes.
Silicon Valley Bank, a major partner for tech startups and venture capital firms, was closed on Friday by California state regulators. The Federal Deposit Insurance Corporation quickly stepped in to secure deposits. Furthermore, Silicon Valley Bank UK, an entity that was quick to announce it is completely separate from the closed US bank, was also shut down by British regulators over the weekend.
SVB was the second of three major US banks to be closed in the span of less than a week. On Wednesday, March 8th, the crypto-friendly Silvergate Capital announced it would wind down its operation and liquidate the bank after several months of setbacks and uncertainty dating back to the downfall of FTX. On Sunday, another digital asset-friendly bank, Signature, was closed by US authorities in a surprise move due to “systemic risk”.
Banks Stock Collapse and Crypto Markets Spike Amidst the Market Chaos
The ongoing chaos with the banks in the United States had a notable effect on the markets across US and Europe. Despite the authorities issuing multiple guarantees that US banking institutions are safe and stable, the shares of multiple major such entities were significantly in the red.
The downturn that started already in the premarket, however, somewhat subsided as the trading day went on. For example, the stock of the Western Alliance Bankcorporation which lead the pre-trading fall being more than 80% down before the markets opened was about 40% in the red by the time of writing. On the other hand, cryptocurrencies, as well as various digital assets-related companies took a completely different trajectory.
Throughout the day, the price of Bitcoin rose more than 9% and Ethereum was hot on its tail being 6% in the green. Similarly, stocks of the cryptocurrency exchange Coinbase skyrocketed and rose by more than 13%. Furthermore, MicroStrategy shares jumped 18% and the Grayscale Bitcoin Trust traded nearly 15% higher than on Friday.
This article originally appeared on The Tokenist
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