• Silvergate Bank must return $9.85 million to BlockFi as part of the latter firm’s bankruptcy proceedings.
• The two companies entered an agreement in August 2020, where Silvergate acted as a depository institution and BlockFi established a reserve containing $10 million.
• Silvergate recently delayed its 10-K filing due to ongoing regulatory investigations, leading some major crypto firms to distance themselves from the bank.
Silvergate Must Return $9.85M Deposit to BlockFi
Silvergate Bank has been ordered to return $9.85 million to BlockFi as part of the latter firm’s ongoing bankruptcy proceedings, according to a March 3 filing. This is due to an agreement set up between the two companies prior to BlockFi’s bankruptcy, where Silvergate acted as a depository institution and BlockFi established a reserve containing $10 million with unrestricted access for 90 business days after the last relevant transfer.
History of Relationship Between Companies
After BlockFi filed for bankruptcy in November 2022, Silvergate stated that it had less than $20 million of exposure to them and was not a custodian for their Bitcoin-collateralized SEN Leverage loans or had any investments in them. Despite this, they maintained a close relationship and BlockFi referred to them as their “banking partner” on Nov. 10 before halting all withdrawals indefinitely due to FTX’s separate collapse that day.
Recent Regulatory Investigations
This week’s court order is seemingly unrelated to recent controversy around Silvergate when they announced that they would delay their 10-K filing and alluded towards various ongoing regulatory investigations on Mar 1st 2021. That led many major crypto companies like BlockFi, who didn’t comment on the issue this week, distancing themselves from the crypto-friendly bank looking out for their own interests.
In conclusion, this court order is part of Blockfi’s ongoing bankruptcy proceedings which has more than 100 000 creditors owing between one billion and ten billion dollars each with them having unrestricted access of funds amounting up too nine point eight five million dollars released by Silveregate Bank per court order based on an agreement made between both parties before Blockfi declared bankrupty in November 2022