Bankrupt cryptocurrency lender BlockFi has $227 million in uninsured funds remaining in accounts managed by bankrupt lender Silicon Valley Bank.
According to a March 10 filing by the Justice Department, BlockFi has deposited $227 million in a money market mutual fund that is not insured by the now-collapsed Federal Deposit Insurance Corporation (FDIC) of Silicon Valley banks. there is
The Department of Justice said BlockFi accounts are not considered deposits and are not insured by the FDIC, and may lose value, according to Silicon Valley Bank documents. Federal regulators claimed BlockFi ignored warnings about the dangers of uninsured accounts earlier this month.
The disclosure came on the same day that federal regulators seized the bank after its stunning collapse. Silicon Valley Bank was one of the largest providers of financial services to tech startups, including cryptocurrency companies.
Meanwhile, insured depositors are expected to have access to their funds by Monday morning. Depositors with funds in excess of the insurance limit will obtain a trustee certificate for their uninsured balances.
Some in the cryptocurrency community have noted that BlockFi funds may not be at direct risk, despite the SVB issue. Some crypto Twitter users claimed that BlockFi’s stock value would depend on the contents of Money Market Funds (MMFs), not what happens to Silicon Valley banks.
“Is this a regular MMF, unaffiliated with SVB and held with SVB or its securities affiliates? “MMF is not insured by his FDIC, but the value of the stock will depend on what’s in the MMF, not what happens to his SVB.”
More crypto companies exposed to SVB
Besides BlockFi, many cryptocurrency companies have disclosed their exposure to banks. For example, Circle, the issuer of the world’s second largest stablecoin USDC, revealed that he held an undisclosed portion of $9.8 billion in cash reserves at the failed Silicon Valley bank.
The company said in a statement on Friday that SVB was one of six banks it relied on to manage USDC’s cash reserves, but insisted USDC could continue normal operations. , the stablecoin has distanced itself from its target $1 peg in a wave of withdrawals.
Additionally, crypto-focused venture capital firm Pantera may also have an unknown amount of exposure to SVB’s demise. Last month, the company counted failed banks among its three private fund managers, according to a Feb. 3 filing with the SEC.
The Avalanche Foundation, which supports the Avalanche blockchain, Yuga Labs, the entity behind the Bored Ape Yacht Club NFT project and other good collections, and Web3 company Proof, have all been hit hard by the recent silicon collapse. Some cryptocurrency companies. valley bank.
BlockFi became the first company to file for bankruptcy in the aftermath of the FTX collapse. A cryptocurrency lender he has over 100,000 creditors to whom he owes $1 billion to $10 billion.