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BlockFi’s Uninsured $227 Million In Silicon Valley Bank Raises Concerns, Filing Shows

Press Releases Crypto News Bitcoinist BlockFi’s Uninsured $227 Million In Silicon Valley Bank Raises Concerns, Filing Shows

Reports have shown that BlockFi also has $227 million in the troubled Silicon Valley Bank, which wasn’t insured. Notably, SVB is not managing the fund directly.

As the saga of the Silicon Valley Bank shutdown continues, more victims are emerging. The first to feel the brunt was Circle, the firm behind the popular USDC stablecoin. It attempted to withdraw its $3.3 billion from the embattled bank but failed.

BlockFi Bankruptcy Case Filing Reveals Money In SVB

BlockFi filed its Chapter 11 Bankruptcy on November 28, 2022. One of the reasons for the action was the FTX collapse earlier that month. The crypto lender was part of the victims of FTX and its sister company Alameda Research.

It had rendered loans to Alameda Research and failed to retrieve them before the FTX crash. It even had some issues trying to grab Robinhood shares worth $450 million, which SBF purchased and used as collateral for the Alameda Capital loan.

As the Silicon Valley Bank issue erupted, the investigators discovered that BlockFi had kept $227 million in SVB’s money market mutual fund (MMMF). SVB’s balance summary statement shows that the amount is not insured under the FDIC or any other federal government agency and is not guaranteed by SVB.

Since SVB is not managing the fund directly, BlockFi’s risks will depend on how the fund performs and not the SVB’s financial issues.

A Brief On Silicon Valley Bank MMMFs

Money market mutual funds directly invest in “highly liquid near-term instruments” like high-quality short-term debt instruments, cash, and cash equivalents. The US Securities and Exchange Commission regulates these funds, and the FDIC’s federal deposit insurance covers up to $250,000 per fund depositor.

SVB offered many mutual fund investment services to its customer. The silver lining is that the bank doesn’t manage

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Author: Eli Dambell

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