On March 12, 2023, a crypto analytical platform known as Mr. Whale tweeted that the capital market corporation Morgan Creek Capital was discovered to be a big depositor at the commercial banking powerhouse Silicon Valley Bank (SVB), which had just failed.
Significantly, Mr. Whale tweeted that venture investor Anthony Pompliano, a partial owner of Morgan Creek Capital, has been “urging the government to bail the bank out”:
FDIC takes charge: SVB shut down after DFPI order
The DFPI’s order on March 10 resulted in the closure of SVB, with the FDIC taking over as the receiver. This led to transferring of all insured deposits to the newly formed Deposit Insurance National Bank of Santa Clara (DINB).
The unexpected downfall of the financial powerhouse has had a significant impact on the whole financial industry, causing investors and financial institutions to experience dread and worry as a result. After the fiasco, it was discovered that many banks were in danger, indicating “contracting margins” due to the financial crisis.
FDIC’s deadline dismay
Though the FDIC assured the depositors of access to their insured deposits “no later than Monday,” the depositors and individual investors were shocked.
According to an email from Ashley Tyrner, CEO of SVB client FarmboxRx, she expressed her shock upon learning about the financial difficulties that the bank had been encountering. She mentioned that the news of the bank run was already widespread by the time they started seeing articles. Additionally, while the venture capital community publicly showed their support to stabilize the situation, they secretly advised their portfolio companies to move their funds out of the bank immediately.
In a similar vein, according to the allegations made by Mr. Whales, Morgan Creek Capital is another establishment that the decline of SBV has severely impacted.