(Natural News) In an attempt to plug the holes of the sinking ship caused by a surge in withdrawals, the United States Federal Home Loan Banks System (FHLB) is lending billions of dollars to two of the world’s largest cryptocurrency banks: Signature Bank and Silvergate.
The two entities have already borrowed more than $13 billion from FHLB, which was founded during the Great Depression to support housing finance. It has more than $1.1 trillion in assets and more than 6,500 members across 11 regional U.S. banks.
In the last quarter of 2022, FHLB reported that it lent nearly $10 billion to Signature Bank, a commercial bank, which is one of the largest borrowing transactions by a bank in recent year. The loan was approved for its blockchain-based digital platform in 2018 by the Department of Financial Services of New York.
At least $3.6 billion was also lent by FHLB to Silvergate, according to Q4 2022 filings. Silvergate says it is experiencing a significant outflow of deposits, which is why it is now taking steps to maintain cash liquidity, including by selling debt securities.
The company experienced a net loss of $1 billion during the last quarter of last year, which is attributable to common shareholders. Only $7.3 billion in digital asset customer deposits were made at Silvergate in Q4 2022, which is significantly lower than the previous quarter’s $12 billion. (Related: Remember last summer when 3AC’s founders fled the country amid multiple crypto Ponzi scheme collapses?)
First crypto, now traditional finance: The money changers’ house of cards is falling
It was believed that traditional finance, meaning the fake fiat money system owned and controlled by central banking globalists, was immune to the so-called “crypto contagion” that spread following the collapse of FTX and numerous other crypto scams. That is no longer the case now that these FHLB loans to crypto-exposed banks have surfaced.
“This is why I’ve been warning of the dangers of allowing crypto to become intertwined with the banking system,” said career politician Sen. Elizabeth Warren (D-Mass.) in a statement to the Wall Street Journal, adding that taxpayers should not “be left holding the bag for collapses in the crypto industry.”
This is “a market brimming with fraud, money laundering and illicit finance,” Warren further told the media outlet.
Since the collapse of FTX, numerous other companies have gone, or are in the process of going, belly up due to the ripple effect of how modern finance works. Most recently on January 19, crypto lender Genesis filed for Chapter 11 bankruptcy protection, citing liabilities of anywhere from $1 billion to $10 billion.
Another digital bank, Moonstone Bank, recently announced that it is exiting the crypto space entirely due to recent developments.
Instead of focusing on serving high-net-worth individuals, Moonstone now plans to refocus on taking a “community bank” role instead.
Writing for the Hill, Cornelius Hurley stated that the fiasco with FHLB has brought to light the fact that the 90-year-old system is both irrelevant and dangerous.
“Detachment from reality is a strategic weapon of all 11 FHLBanks. Belief in their own rhetoric causes them to act in ways that are antithetical to the interests of the taxpayers who fund them and to turn their backs on the communities they were intended to serve,” he said. “For decades, the FHLBanks have fed off complacent regulators and a protective Congress. Their regulator is no longer complacent. Congress will soon tire of defending the indefensible.”
“Seems like cryptos behave like a stock, but there is no product,” wrote one of our own commenters. “Nothing to liquidate except normal currency in a normal bank.”
More related news coverage can be found at Collapse.news.
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