How SVB, FTX and stocks fell victim to the Fed's year of rate hikes

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Victims of the Fed: How a year of rate hikes cratered stocks - and fueled the demise of FTX and Silicon Valley Bank

's price plummeting 39% over the past year. FTX boss Sam Bankman-Fried allegedly responded by using customers' money to prop up his trading firm Alameda Research – and now he's in the US awaiting a criminal trial on eight counts including fraud.

"Although this has been charged as fraud, you can argue that a Fed hiking cycle exposed it, as it reversed the enthusiasm for crypto, which ultimately exposed the corporate wrongdoings at the company," Deutsche Bank managing director Jim Reid said in a research note. Meanwhile, SVB collapsed last week – and rising interest rates were a huge factor in its demise. SVB lost $1.8 billion on its bond portfolio as fixed income prices plummeted, while its deposit base dried up because of tech startups' growing reluctance to list on the stock market.

 

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Possibly SVB, but the article uses non-sequitur logic to justify that FTX’s fraud was only exposed because of fed rate hikes.

Victims of the Fed? Victims of their own recklessness. The whole economy is a house of cards built on free credit. Fed tries to start to normalize rates and those out on a credit limb suddenly die? The Fed has been complicit it propping up the economy for a decade.

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Silicon Valley Bank’s parent company files for bankruptcy protectionSVB Securities and SVB Capital were not included in the filing by SVB Financial Group.
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