BlockFi, a cryptocurrency lending and trading platform, has continued operations despite the collapse of its banking partner,Silicon Valley Bank (SVB). BlockFi has informed a New Jersey bankruptcy court that it has access to cash to operate normally, including paying employees and vendors, despite the recent collapse of its former banking partner, Silicon Valley Bank (SVB).
BlockFi’s attorney, Christine Okike of Kirkland and Ellis, stated in court that $236 million of the company’s funds were invested in highly rated money market funds run by BlackRock and Morgan Stanley, with SVB acting as the agent on behalf of BlockFi. The company expects to have access to $37 million of the $278 million at SVB later in the day. In the meantime, the U.S. Trustee has urged BlockFi to move the $227 million in uninsured money market funds to a safer location, protected by government guarantees from the Federal Deposit Insurance Corporation (FDIC).
The New York-based bank had provided deposit accounts for BlockFi, but the partnership ended abruptly when federal regulators closed Silicon Valley Bank (SVB). According to BlockFi’s attorney, the platform has enough cash reserves to continue operations and to pay vendors and staff members.
BlockFi’s response
BlockFi has issued a statement reassuring its users that it is “business as usual” for the platform, and that customer funds remain secure. The platform has also stated that it is working to resolve the issue and will provide updates as necessary. The continued operation of BlockFi has been a source of relief for its customers, who have come to rely on the platform for its cryptocurrency lending and trading services.
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Legal action against Silicon Valley Bank (SVB)
The collapse of Silicon Valley Bank (SVB) has prompted legal action by affected customers. Some have filed lawsuits against the bank, claiming damages and loss of funds due to the sudden closure. The regulatory action against Silicon Valley Bank (SVB) highlights the challenges facing the cryptocurrency industry, as it struggles to navigate the complex regulatory landscape and find stable banking partners. Despite the challenges, platforms like BlockFi continue to innovate and offer new services to their customers.
Last November BlockFi field for bankruptcy due to its dependence on FTX, which is now bankrupt.
BlockFi Petitions the U.S. Bankruptcy Court to Let Clients Withdraw From Blocked Accounts
Image – Uploar/John Muir
