The prominent economist known as “Dr. Doom” celebrated this week’s collapse of cryptocurrency-linked Silicon Valley Bank and Signature Bank of New York.
Nouriel Roubini, a New York University professor emeritus known in part for accurately calling the 2008 financial crisis, slammed SVB and Signature Bank for getting involved in the crypto sector before their respective downfalls.
“All banks doing crypto biz are collapsing. Good riddance,” Roubini tweeted.
Federal regulators shut down SVB and Signature Bank after concerns about their stability caused panicked investors to stage a run on the banks. Another crypto-linked bank, Silvergate, announced plans to wind down its operations earlier this month.
The feds guaranteed all deposits at both SVB and Signature Bank whether they were insured or not. Before the intervention, the FDIC’s rules insured deposits of up to $250,000 per account — with holders at risk of losing anything higher than that limit.
Roubini was particularly incensed about the feds’ decision to backstop depositors at Signature Bank.
“What is the logic of protecting the depositors of Signature Bank, a bank that recklessly decided to jump into the crappy crypto cesspool & bet the house on s–tcoins biz?” Roubini said in another tweet.
“Mother of al [sic] moral hazards. Rewarding scammers, crooks, human traffickers, criminals & con men. Sickening!” he added.
SVB and Signature Bank rank as the second- and third-largest bank failures in US history, respectively. Their collapses are the largest since the Great Recession of 2008.
SVB was a preferred vender for tech startups, including cryptocurrency firms, prior to its collapse into federal receivership. The bank touted its role in banking nearly half of all venture-backed startups in the US.
Meanwhile, Signature and Silvergate were preferred banking partners for major crypto firms. Earlier this week, crypto exchange Coinbase disclosed that it had “an approximately $240m balance in corporate cash at Signature.”
A vocal critic of cryptocurrencies, Roubini has described bitcoin as “bulls—t” in the past.
After the collapse of disgraced crypto ex-billionaire Sam Bankman-Fried’s FTX last year, Roubini slammed “con men” in the fledging industry and referred to Binance CEO Changpeng Zhao as a “walking time bomb.”
“What are the 7 C’s of crypto? Concealed, corrupt, crooks, criminals, con men, carnival barkers and, finally, CZ,” Roubini said last November — the latter a reference to Zhao.
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