BlockFi Uninsured $227M in Silicon Valley Bank MMMF

A recent report on a new bankruptcy filing revealed that defunct cryptocurrency lender BlockFi allocated $227 million in uninsured funds to a money market mutual fund (MMMF) sponsored by the insolvent Silicon Valley Bank (SVB).

The California Department of Financial Protection and Innovation closed SVB, a key business partner for venture-backed businesses, on March 10.

The move adds to recent Silvergate woes, which have seen cryptocurrency prices plummet since the cryptocurrency-friendly bank’s financial difficulties were made public in early March.

According to a March 10 filing in BlockFi’s ongoing bankruptcy proceedings, the firm has invested $227 million in MMMF provided by SVB.

BlockFi investments are not FDIC insured

Notably, the complaint cites a summary of SVB’s balances, claiming that BlockFi’s investments are “not guaranteed by the bank,” are not insured by the Federal Deposit Insurance Corporation (FDIC), and are not covered by any other federal government agency.

Federal deposit insurance provided by the FDIC covers deposits up to $250,000 per depositor, but excludes all money market funds.

Furthermore, despite SVB’s difficulties, investors receive fund shares in exchange for their capital, so BlockFi’s funds may not be at risk.

Nonetheless, USD Coin appears to be a company that will be negatively impacted by the collapse of SVB and the bankruptcy of Silvergate.

SVB, Silvergate Bank and BNY Mellon had $8.6 billion in reserves as of Jan. 31, or about 20% of their reserves, according to the company’s latest audit report.

While Circle announced via Twitter on March 10th that the company and USDC will be “operating as normal” while they await “clarification on how SVB’s FDIC override will affect its depositors,” there is uncertainty surrounding the exact amount of SVB and Silvergate .

Recall that BlockFi had previously stopped allowing withdrawals on its platform following FTX’s liquidity crisis, and eventually filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court of New Jersey last November.

The post BlockFi Has Uninsured $227M for Silicon Valley Bank MMMF appeared first on Blockchain, Cryptocurrency & Stocks News.

Information source: compiled by 0x information from BITCOININSIDER.The copyright belongs to the author Anonymous, and shall not be reproduced without permission

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