Is Cross River Bank next after SVB?

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Hello reader,

I’ve learned a lot of interesting new terms and concepts ever since I joined Tech in Asia. First, I had to navigate the basics of startup terminology: VC, MVP, unicorns, seed money, etc. Then, I started going in on the nitty-gritties with acronyms like ARR, MAU, LTV, CAC, and so on.

And then I had to figure out the world of crypto. I’ve learned some interesting things over the last few years, such as what an NFT is, how smart contracts work, and most recently, what shorting means.

On that note, today’s premium story talks a bit about shorting. It takes a look at how a provocative short seller is going after a bank and how that could mean it will be the next financial institution to go down.

Today we look at:

• Whether Cross River Bank will be the next to fall
• An exciting partnership between a greentech firm and an energy company in Taiwan
• Other newsy highlights such as Babel Finance’s restructuring and Grab Malaysia’s partnership with the government to issue vocational licenses

Premium summary

Who’s next?

Image credit: Timmy Loen

FTX, Silvergate Bank, Silicon Valley Bank, Signature Bank – what do these names have in common? Well, their downfalls were all predicted by famed short seller Marc Cohodes. The next name on his list? Cross River Bank.

• The background: Cross River Bank’s value proposition had long been its bullish stance on the fintech sector. It underwrites loans issued by VC-backed fintech startups, allowing them to effectively perform the services of a bank without having the license to do so. Last year, the bank put crypto front and center in its business, as opposed to other fintech players that distanced themselves from the sector.
• Cause for concern: Cross River Bank is currently under investigation for failing to adequately suss out fraudulent applications in the Paycheck Protection Program, a pandemic relief initiative. Concerns have also been raised about the firm’s dependence on fintech startups – specifically fintech-originated loans – and the credentials of its leadership team.
• Short or not: Cross River Bank isn’t publicly listed, so it can’t be shorted the same way other banks have been. Cohodes is calling for Coinbase, the bank’s most prominent crypto customer, to be shorted. But only time will tell how this will pan out.

Read more: Is crypto-friendly Cross River Bank the next to fall?

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