Filing shows BlockFi has uninsured $227M in Silicon Valley Bank MMMF
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).
SVB — one of the U.S’s largest banks and key partners to venture-backed companies — 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.
The move adds to the recent Silvergate bankruptcy carnage which has seen crypto markets tumble since the crypto-friendly bank’s financial woes came to light at the beginning of March.
Few more bank collapses then up only
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.
Notably, the filing highlights a balance summary statement from SVB which states that BlockFi’s investment is not a Federal Deposit Insurance Corporation (FDIC) insured deposit, not insured by any federal government agency and “not guaranteed by the bank.”
The FDIC’s federal deposit insurance covers up to $250,000 per depositor, however it does not cover the scope of money market funds.
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.
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Investors are issued fund shares in exchange for their capital, and as such, BlockFi’s funds may not be at risk despite SVB’s troubles.
Is this a regular MMF, not affiliated with SVB, custodied at SVB or its securities
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