Yesterday, with SVB imploding, I couldn't help but reminisce about my time working in fiat banking. I spent 15 years at multiple institutions before joining Unchained, but there's one that is most relevant here.

In one role, I sat on the capital markets trading floor, doing daily analysis of risk and P&L for the trading books. I focused mostly on cash instruments like bonds, stocks, convertible debt, etc.

Most of the time, things are pretty quiet. But every once in a while, as the fiat world is inclined to do, there is some episode of chaos that pops up. Things like the repo spike in 2019 or March 2020 covid stuff.

When these types of events happen, senior management and regulators like the Fed and FDIC submit urgent requests for information. What follows is a flurry of activity from everyone: traders, risk management folks, finance, liquidity management, etc. We were all working furiously, late into the late, multiple days in a row, to provide insight into the risk that may be hiding under the surface.

To what extent are we exposed? What is our counterparty risk to SVB? What is their counterparty risk that is one step removed? How did the volatility in rates affect our P&L? How accurate are the marks on our positions relative to other players in the market? etc, etc

So yesterday I was thinking back to my days on the trading floor, imagining my former colleagues were probably in the middle of that shitstorm. And I'm lucky enough to work in bitcoin, which fixes so many of these problems. I spend my days and nights orange-pilling and helping people take control of their wealth.

Pura vida. 🤙

here’s the first draft: edit like the wind!

***

*Make SVB Depositors Whole - 1 of ~120*

On March 10th, Silicon Valley Bank went out of business. This has left thousands of tech startups and venture capitalists unable to make payroll, to manage their billings, and to make the world a better place.

The Tech industry is the beating heart of American dynamism and it is difficult to imagine the extent to which working people across the US - and possibly across the world - will suffer if the depositors of the bank are not made whole.

With interest rates at staggering decadal highs, there seems to be little possibility of financing a restructuring of the bank on the open market. The scope of world-changing innovation supported by SVB and brought about by its depositors has consequences so profound, and so far in the future, that it is frankly unfair to try to value it using the politically questionable discount rates cruelly imposed top-down by the government in recent weeks and months. The only solution is a bottom-up effort to save this vital engine of growth, prosperity, opportunity, progress, and change.

This is why we are asking for $1bn to ensure the tech startup and venture capital community is not made to suffer unnecessarily for the sins of the credit markets. Please note this is the maximum GoFundMe will allow and so we expect to need to do this around 119 more times. But we have to start somewhere. We have to try. We have to be the change we want to see in the world.

Thank you for your time and consideration.

Save Tech. Save the VCs. Save America.

Yeah, SVB failed because of an deposit duration/asset maturity mismatch, which couldn’t be corrected due to the cost of rolling those assets, which was a result of terrible risk management on their balance sheet. Their completely loss of liquidity was a function of that. Not a function of the bank being insolvent.

Imagine the backroom deals and consequences of them going on this weekend?

Financial regulation to protect your money FROM a system designed to steal your money is an oxymoron.

#Bitcoin

The banking rails are clogged at the moment. Creates pricing and mark to market issues for all types of assets based on players selling what they can, not what they want to.

The same Luna / DCG induced crunch has now bled over to TradFi.

Now we have multiple base money assets with piping clogs and systemic failures across both rails and different types of investors > Public, private, sound, unsound.

Not to mention the differing mix of liquidity profiles and the challenges that creates.

The banking rails are clogged at the moment. Creates pricing and mark to market issues for all types of assets based on players selling what they can, not what they want to.

Substantial BTC spread between Gemini (running a premium) and other exchanges. Anyone know what’s up?

😂🤔🤔🤔🙋‍♂️

Thing is...where did all that excess cash come from?

VCs have been throwing around Monopoly money on deals that make no sense, and doing so at astronomical multiples.

The music stopped and firms (Theil and other VCs) began scurrying back up the daisy chain of leverage seeking prestine collateral and pulling funds from institutions they knew mostly likely wouldn’t survive because of the levered books they had. Those books that “appeared” like normal looking collateral but were actually complex web of lending on the same underlying or fixed income positions that yield 1-2%… when yields blew out it blew them up.

The most interesting thing about the SIVB situation is that it seems they were ground zero of VC finance - vulture finance. Which has been in a massive bubble for years.

It’s the exact same situation that DGC caused in digital assets hitting crypto and Bitcoin.

gm ☕, PV 🤙