Silvergate dismisses speculation of trouble, says BlockFi exposure is minimal

abdelaziz Fathi

Crypto-friendly bank Silvergate Capital claimed on a Tuesday blog post that it had minimal exposure to crypto lender BlockFi, which filed for chapter 11 bankruptcy protection this week.

BlockFi

Silvergate revealed that it held roughly $20 million worth of cash or its equivalent – less than 0.1% of its digital asset customers – on BlockFi. That compares to $13.2 billion in total crypto-related deposits, according to the firm’s Q3 revenue report.

Apart from that, Silvergate CEO Alan Lane reassured clients that they don’t have equity into BlockFi and never used its platform as a custodian for its Bitcoin collateralized leverage loans, which haven’t faced any loss or forced liquidations to date.

“As the digital asset industry continues to transform, I want to reiterate that Silvergate’s platform was purpose-built to manage stress and volatility. The SEN continues to operate as designed, and our support teams are available 24 hours a day, seven days a week to help our customers during this period of adversity,” he added.

Lane continued that he expects a tough crypto winter, but Silvergate isn’t going anywhere, pointing out that fund flows with crypto exchanges are a necessary part of the business.

The statement further states that the US-listed bank has been getting a lot of heat from investors and the general public alike lately and has been under a lot of FUD (fear, uncertainty, and doubt), with a whole lot of tweets adding to the fire over the last week. However, most of them seem to be bogus, it added.

Silvergate, which is trading under the ticker (NYSE: $SI), allows its customers to obtain US dollar loans collateralized by their bitcoin holdings at some crypto exchanges that Silvergate is currently serving.

In the absence of major institutional attention, Silvergate Bank provides tailored financial services to businesses that are directly or indirectly dealing with cryptocurrency and blockchain-related services.

BlockFi filed for bankruptcy protection Monday after weeks of speculation about its solvency after it paused withdrawals earlier in November. The lender had been relying on a $400 million line of credit from crypto exchange FTX, which itself filed for bankruptcy protection two weeks ago.

Approximately eight additional affiliated companies are part of the proceedings, including its Bermuda subsidiary. In the bankruptcy filing, BlockFi indicates it has more than 100,000 creditors, with liabilities in the range of $1 billion to $10 billion. The company has $257 million in cash on hand, which it says will provide sufficient liquidity to support operations during the restructuring process.

 

Read this next

Digital Assets

Germany-focused DekaBank taps METACO for digital asset custody offering

“Digital assets are a critical part of the future, a radical new way for how assets will be represented, from currencies to real estate.”

Technology

Eventus launches AML solution for TradFi and digital asset space

“Firms operating in traditional financial markets and digital assets alike are facing greater challenges than ever to protect themselves from those presenting a risk to their businesses and reputations, along with their standing with government regulators.”

Industry News

Qomply launches direct-to-FCA trade report solution that bypasses ARM

“Certainly, for back-reporting large volumes of data, QomplyDirect removes extra ARM fees by offering the flexibility of sending reports directly to the FCA via a firm’s own infrastructure.”

Executive Moves

BNP Paribas AM appoints Geoff Dailey as Deputy Head of US Equities

“Geoff has more than 20 years’ experience in the industry and as a key, senior member of the team with a strong investment pedigree and leadership profile, he is the natural successor for Pam.”

Retail FX

BUX joins forces with BlackRock for iShares ETFs offering in 7 European countries

“By joining forces with Blackrock, a renowned expert in financial markets and products, we have created a good solution for clients that are overwhelmed by the choice of products and don’t know how and when to start investing. Together, BUX and BlackRock can make a real impact on how Europeans invest and approach their financial future.”

Retail FX

CMC Invest gets in-principle approval to launch shares, ETFs, futures, and options in Singapore

“This announcement is a major milestone and validation for CMC Markets. Our business has been offering CFDs in Singapore since 2007, but the Capital Markets Services Licence for CMSI will allow us to serve our clients with more robust investment products, including shares and ETFs.”

Executive Moves

Eightcap hires ex-IG, ex-StoneX Alex Howard as CEO

“In my first weeks, the priority is to immerse myself in the business, including connecting with the global team, developing a nuanced understanding of strategy and operations, and listening to clients.”

Digital Assets

OneCoin founder Ruja Ignatova is selling penthouse in UK

OneCoin founder Ruja Ignatova, who steered one of the world’s biggest cryptocurrency frauds, is back into the spotlight more than five years after vanishing from the public eye.

Digital Assets

Bitpay taps MoonPay to offer access to +60 cryptocurrencies

Crypto payment service provider Bitpay said it’s partnering with exchange and web3 infrastructure provider MoonPay to provide its users with easier access to buy cryptocurrency instantly.

<