The Silvergate Bank admitted that it has exposure to the bankrupt crypto lending platform BlockFi.
Silvergate Bank is a Federal Reserve member commercial bank and financial technology company which is specialised in banking for crypto assets exchanges & related activities like bitcoin miners, institutional investors, software developers, and financial technology companies. This company was established in 2013 and went public in 2019.
As we know, the crypto market is going through a big struggle these days, which arose with Terra (Lunc) collapse & still going on. The latest example of the digital sector struggle can be seen through the bankruptcy of BlockFi. Crypto lender BlockFi filed for bankruptcy on 28 November in a US district court under chapter 11.
The panic among crypto investors reached the Silvergate customers and many people claimed that Silvergate had significant exposure to the bankrupt platform BlockFi and there are chances that Silvergate may also go for bankruptcy.
On 29 November, Silvergate Bank officially released its response to the increasing FUDs and confirmed that Silvergate will not face any significant impact because of BlockFi bankruptcy because Silvergate Bank’s deposits in the BlockFi are “limited to less than $20 million of its total deposits from all digital asset customers.”
Silvergate also confirmed that its users’ custody funds were not on the BlockFi. In short, no one client is at risk in this situation.
BlockFi was a popular crypto lending platform but its exposure was with the bankrupt crypto exchange FTX, which resulted in a very bad situation for this platform.
On 28 November, BlockFi filed for bankruptcy and also sued Sam Bankman-Fried (SBF)’ company Emergent Fidelity Technologies. Through the suit, BlockFi seeks to collect certain stocks which are under the bankrupt platform FTX.