SVB suffered from the rise in interest rates from the Federal Reserve. This did some damage to the value of its investment assets, especially bonds. As a result, the bank had to resort to a capital raise. Many startups withdrew their deposits from the bank since they were burning a lot of cash. SVB had to sell bonds, primarily U.S. Treasury securities, at a discount to cover these withdrawals. But its attempt to raise the needed $2.25 billion failed.
Silvergate, the crypto bank, collapsed two days earlier. The bank was where most of the big crypto firms went, as traditional banks did not want to do business with them.
Silvergate had been established in 1988, initially specializing in lending to industrial customers and offering loans for both residential and commercial real estate.
In 2013, the bank began to court crypto firms, as traditional banks were reluctant to do so due to the opacity prevailing in the sector.
Silvergate’s collapse was due to pressure from regulators, in particular the Department of Justice, which opened an investigation into its business relations. They were investigating the former Crypto King, Sam Bankman-Fried.