California state regulators closed the bank yesterday in what is now described as the second-biggest banking failure in U.S. history.
Attorney John E. Deaton has suggested that CNBC Mad Money host Jim Cramer owes viewers an apology after urging them to invest in the failed Silicon Valley Bank.
The CryptoLaw founder, who represents thousands of XRP holders as a friend of the court in the United States Securities and Exchange Commission (SEC) case against Ripple, expressed this view in response to a tweet from David Schwartz, Ripple’s chief technology officer. Notably, Schwartz pointed out that less than a month ago, Cramer had advised viewers of his CNBC program to invest in the bank.
Has @jimcramer ever apologized after giving the worst possible advice possible? https://t.co/aqxHLRpnz4
— John E Deaton (@JohnEDeaton1) March 11, 2023
California state regulators closed the bank yesterday in what is now described as the second-biggest banking failure in U.S. history. The bank reportedly held $209 billion in total assets at the end of last year.
A bank run ensued this week after the firm disclosed that it planned to sell over $2 billion in shares to cover losses on previously held securities.
As explained by Aztec Network’s jonwu.eth (@jonwu_), the bank, failing to anticipate the Fed’s rate hikes, invested customer deposits in long-term securities to earn yield. However, Fed rate hikes lead to increased withdrawals, fewer deposits, and difficulty raising capital. Consequently, it lacked sufficient liquidity to fulfill the rush of withdrawal requests. By Friday, with little hope for a takeover, regulators were forced to step in.
While the Federal Deposit Insurance Corporation will process withdrawals for insured depositors from Monday, uninsured depositors will receive advanced dividends. Unfortunately, per Bloomberg, over 93% of depositors are uninsured. This is worrisome as the bank served several tech startups in Silicon Valley.
Meanwhile, it will not be the first time Cramer has steered investors in the wrong direction. Crypto community members often argue that the pundit has consistently done so throughout his career. Unsurprisingly, crypto community members, particularly XRP holders, have likened his endorsement of SVB to that of Bear Stearns just before its collapse during the 2008 financial crisis.
Notably, there is no love lost between the XRP community and the CNBC host. Last year, the pundit bashed the altcoin as a scam on multiple occasions.
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