A recent court filing revealed that bankrupt crypto lender BlockFi holds $227M worth of non-FDIC insured funds in an MMMF with Silicon Valley Bank.
In the official document, US Trustee Andrew Vara noted that the $227M sum invested by BlockFi is “unprotected.” Moreover, the funds may violate bankruptcy laws.
SVB’s balance summary statement for BlockFi’s account stated, “[MMMF investments] are: not a deposit, not FDIC insured, not insured by any federal government agency, not guaranteed by the bank, may lose value.
BlockFi’s account does not comply with SVB’s Depository Agreement, with Vara adding that he had advised BlockFi to safeguard the funds. Although BlockFi agreed to respond to the US Trustee, the bankrupt lender failed to provide proof of compliance before Vara published the court document.
Similarly, Circle, the issuer of USD Coin (USDC) revealed that Silicon Valley Bank was one of the six firms that managed a fraction of its cash reserves. The stablecoin has lost its peg with USD, with the token’s price dipping as low as $0.88 following SVB’s collapse.
Avalanche (AVAX) also reported that the firm has a $1.6M exposure to Silicon Valley Bank.
Written by
Ayush Pande
Ayush Pande is a hardware, gaming, and crypto writer based in India. He's a tech enthusiast who's fascinated by the potential of blockchain technology.
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