According to a new bankruptcy filing, defunct crypto lender BlockFi has $227 million worth of uninsured funds allocated to a money market mutual fund (MMMF) offered by troubled Silicon Valley Bank (SVB). <\/p>\n
SVB \u2014 one of the U.S\u2019s largest banks and key partners to venture-backed companies \u2014 was shut down by the California Department of Financial Protection and Innovation (DFPI) on March 10, with no specifics offered at the time of the closure. <\/p>\n
The move adds to the recent Silvergate bankruptcy carnage which has seen crypto markets tumble since the crypto-friendly bank\u2019s financial woes came to light at the beginning of March. <\/p>\n
Looking at the ongoing BlockFi bankruptcy case, a March 10 filing indicates that the firm has $227 million worth of capital in an MMMF offered by SVB. <\/p>\n
Notably, the filing highlights a balance summary statement from SVB which states that BlockFi\u2019s investment is not a Federal Deposit Insurance Corporation (FDIC) insured deposit, not insured by any federal government agency and \u201cnot guaranteed by the bank.\u201d <\/p>\n
The FDIC\u2019s federal deposit insurance covers up to $250,000 per depositor, however it does not cover the scope of money market funds. <\/p>\n
A money market mutual fund invests in highly liquid near-term instruments such as cash, cash equivalents and high-quality short-term debt instruments, and is regulated by the U.S. Securities and Exchange Commission. <\/p>\n
Related: <\/em><\/strong>$920B is the number to watch now that crypto\u2019s trillion-dollar total market cap is gone<\/em><\/strong><\/p>\n Investors are issued fund shares in exchange for their capital, and as such, BlockFi\u2019s funds may not be at risk despite SVB\u2019s troubles.<\/p>\n SVB offered several mutual fund investment services, but according to its website it doesn\u2019t appear to have managed any of the funds itself. The firm lists big names such as BlackRock, Morgan Stanley and Western Asset Management as the fund managers. <\/p>\n As such, the risk to BlockFi in this instance is most likely hindered by the fund\u2019s performance, and not anything related to SVB\u2019s financial woes. <\/p>\n One firm that looks to be directly impacted by the SVB closure \u2014 and the Silvergate bankruptcy \u2014 is USD Coin (USDC) issuers Circle. <\/p>\n According to the company\u2019s latest audit report, as of Jan. 31, $8.6 billion, or roughly 20% of its reserves, were held up in several U.S. financial institutions including SVB, Silvrgate and Bank of New York Mellon. <\/p>\n The exact value held up in SVB and Silvergate is unclear, however Circle issued a statement via Twitter on March 10 noting that the firm and USDC will continue to \u201coperate normally\u201d as it awaits \u201cclarity on how the FDIC receivership of SVB will impact its depositors.\u201d<\/p>\n At the time of writing, USDC has dropped below the $1 peg to sit at $0.98 as per CoinGecko data.<\/p>\n