According to a tweet by Brad Garlinghouse, Ripple used the services of the failing Silicon Valley Bank, but this did not affect the day-to-day operations of the company, since most of its funds are in other partner banks. Garlinghouse assured XRP holders that the company’s financial stability is not in danger. At the same time, the head of Ripple did not specify how much money the company kept in Silicon Valley Bank.
“Everything that is happening now highlights just how broken the current financial system is: money transfers are still not working 24 hours a day, 7 days a week and 365 days a year, rumors are leading to collapse, and money flows circulating inside a deeply fragmented systems,” wrote Garlinghouse.
Setting the record straight on SVB Qs:
Ripple had some exposure to SVB – it was a banking partner, and held some of our cash balance. Fortunately, we expect NO disruption to our day-to-day business, and already held a majority of our USD w/ a broader network of bank partners.
— Brad Garlinghouse (@bgarlinghouse) March 12, 2023
Ripple CTO David Schwartz also tweeted about the collapse of Silicon Valley Bank. He expressed bewilderment as to how the outflow of funds from the bank could lead to its bankruptcy. If the bank used to be solvent, then its assets exceed its liabilities.
“Mass withdrawals don’t change the amount of assets and liabilities, so why can liabilities now exceed assets?” Schwartz wonders.
I still don’t understand how a run on a bank can cause it to become insolvent. If the bank was solvent before, that means its assets exceed its obligations. A run doesn’t change either the assets or the obligations, so how can the obligations now exceed the assets?
— David “JoelKatz” Schwartz (@JoelKatz) March 11, 2023
Ripple is currently in a legal battle with the US Securities and Exchange Commission (SEC) over the status of the XRP coin, and Garlinghouse hopes that the proceedings will be completed this summer.
Source: Bits
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