Silicon Valley Bank, a ley lender for the tech and venture capital sectors and America’s 16th-largest bank by balance sheet size, was seized by federal regulators on Friday in the largest institutional failure since the 2008 financial crisis. Investors are still scratching their heads over what happened at the bank, as the entire collapse occurred quite literally overnight. On Thursday morning, the bank had a market cap of more than $15 billion and by Friday, its $209 billion in assets and $175 billion in deposits made it the second-largest bank failure in U.S. history, according to the FDIC.
The collapse has sparked widespread panic in the tech investor and startup world, with many of the silicon valley-based depositors still trying to understand their exposure and how they might be able to get their money back. Scarily, at the center of it all is the same dynamic that caused institutional failures among traditional banks in 2008 and among numerous cryptocurrency exchanges in last year’s “crypto winter”: a bank run. As concerns about the lender's solvency mounted earlier this week, a wave of attempted withdrawals turned into a tsunami, sending the bank’s value spiraling out of control.
