Silvergate Bank has been ordered to return $9.85 million to BlockFi as part of its ongoing bankruptcy proceedings. March 3rd filing.
BlockFi gets $9.85 million back
According to its court filings, BlockFi and Silvergate entered into an agreement in August 2020, with Silvergate acting as a depository to process certain ACH transactions. In November 2021, BlockFi agreed to set up a reserve that included his $10 million.
The contract stated that accounts would be terminated 90 business days after the last relevant transfer, granting BlockFi unlimited access to those funds.
As a result, Silvergate was forced to release $9.85 million from its reserve account. Holding the remaining $150,000 of her in a reserve account is allowed.
The court order is part of BlockFi’s ongoing bankruptcy proceedings. The crypto lending company has filed for bankruptcy in November 2022. There are over 100,000 creditors, and those creditors owe him $1 billion to he $10 billion.
The relationship between BlockFi and Silvergate
After BlockFi files for bankruptcy in November 2022, Silvergate will: Less than $20 million exposure to block phi.Also BlockFi said he is not a custodian of Bitcoin collateralized SEN leveraged loans and had no investment in BlockFi.
Despite this, the two companies maintained a close relationship.Blockfi called Silvergate a ‘banking partner’ November 10th He said that because Silvergate is observing holidays, it will suspend processing ACH and wire transfers for three days. Later that same day, BlockFi announced that it would suspend withdrawals indefinitely due to another FTX bankruptcy.
This week’s court order forcing the return of funds appears unrelated to the recent controversy surrounding Silvergate. On March 1, Silvergate said he would delay filing the 10-K, alluding to various ongoing regulatory investigations.
This development has caused several major crypto companies to distance themselves from crypto-friendly banks. BlockFi did not comment on the Silvergate issue this week.