Cryptocurrency lending platform BlockFi is stuck with hundreds of millions of dollars in uninsured deposits FDIC.
According to a bankruptcy document filed on March 10, BlockFi is among the customers with deposits not covered by insurance by the Federal Deposit Insurance Corporation of America (FDIC) of Silicon Valley Bank, The bank is in crisis.
Per new bankruptcy filing, BlockFi has $227m in Silicon Valley Bank. The bankruptcy trustee warns them on Mon that bc those funds are in a money market mutual fund, they’re not FDIC secured — which could be a prblm w/ keeping in compliance of bankruptcy law pic.twitter.com/hnpo8anrrS
— Lauren Hirsch (@LaurenSHirsch) March 10, 2023
As Kyptos reported At dawn on March 11, the FDIC and the California state government made a decision to stop operating Silicon Valley Bank. This is a move that marks the collapse of the 16th largest commercial bank in the US, holding up to $ 209 billion in assets. after only 5 days of “resisting”.
The US Federal Deposit Insurance Corporation said it will only open withdrawals for insured deposits with a value of no more than $250,000 next Monday. The $227 million that BlockFi has on Silicon Valley Bank is not FDIC-insured because it is in a money market fund, BlockFi’s Chapter 11 bankruptcy supervisor revealed in the filing.
Excerpt from a balance summary statement provided by the bank:
“Investments in money market funds are not deposits protected by the FDIC nor any federal government agency, are not guaranteed by banks, and may lose value.”
As you may already know, BlockFi is one of the organizations that had to go bankrupt in November 2022. BlockFi showed signs of trouble after the Three Arrows Capital fund collapsed in the middle of this year. The company then had to borrow up to 400 million USD urgently from FTX, but FTX also fell into the same situation. Bankruptcy records of listed companies can number up to more than 100,000 people, including: including the Securities and Exchange Commission (SEC).