By Richard Hines
Cryptocurrency bank, Silvergate Capital has publicly acknowledged that it wasn’t severely exposed to BlockFi, which recently filed for bankruptcy after getting liquidated. The bank claimed that its contact with BlockFi was only in the aspect of the firm’s deposits into the bank.
Whether Silvergate Capital Will Get Liquidated
According to Silver Gate Capital, BlockFi, the now-liquidated cryptocurrency lending company, contributed just $20 million of the total deposits made by creditors into its business, demonstrating that there is no need for concern because it had little exposure to BlockFi.
Following the FTX crash, BlockFi quickly announced that it was stopping withdrawals due to the significant outflow of funds from the platform. A day prior to FTX filing for bankruptcy protection after the firm’s meltdown, this announcement was made.
Silvergate claimed that BlockFi does not have custody of its loans, claiming that these loans have performed outstandingly and remarkably well without incurring debt to the bank or showing any signs of impending liquidation or bankruptcy,
The company’s investment in BlockFi is zero, according to Silver Gate, so it won’t be impacted by the bankruptcy filing.
In a fund collateral account, Silver Gate upholds a “customer first” standard and a security interest. Up to $10 million is held in this account to support one of BlockFi’s services.
Since FTX only had 10% of its total deposits in the form of deposits, the crypto bank previously stated that its exposure to FTX was strictly limited to the firm’s deposit operations and nothing more.
Silvergate Standing Strong Amidst Crisis
Silvergate cannot be liquidated or declare bankruptcy, according to Alan Lane, chief security officer for Silvergate, because the bank was designed from the start to withstand pressure and control volatility.
Lane also went on to say that the bank functions as it was intended to and that help teams are on duty and accessible seven days a week to meet and attend to users’ needs during this difficult and turbulent time.
Other businesses and exchanges, however, are being subtly and severely impacted by this market collapse, with many going out of business and others already declaring bankruptcy.
Since Silvergate had little exposure to the BlockFi liquidation, it is anticipated that it will continue to operate normally.