Silvergate states minimal exposure to BlockFi

Crypto bank Silvergate Capital stated less than $20M exposure to newly-bankrupt lender BlockFi.

In the blog post from Nov. 28, the company officials claim:

BlockFi is not a custodian for Silvergate’s bitcoin-collateralized SEN Leverage loans, which to date have continued to perform as expected with zero losses and no forced liquidations. Silvergate has no investments in BlockFi.

The statement was made after a series of false accusations of grand exposure to BlockFi, which filed for Chapter 11 bankruptcy on Nov.28.

Yesterday, a Swiss investor Walter Bloomberg tweeted:

“Silvergate Capital said to have lent money to BlockFi.”

No further explanation or proof followed.

Silvergate adds:

Silvergate maintains a first priority lien and security interest in a cash collateral account, which contains $10 million for the benefit of Silvergate to support ACH services provided to BlockFi.

Related: BlockFi sues SBF over Robinhood shares

Earlier this month, the Wall Streat Journal posted a piece on Silvergate’s exposure to collapsed FTX, stressing the firm’s stock being cut almost 50%, nearly 90% down compared to last year’s. On Nov. 11, Silvergate again reassured its customers of less than 10% in digital deposits of the company’s total $11.9B, declaring no loans or investments in FTX.

Silvergate’s spokesman told WSJ:

The bank doesn’t have any loans, including bitcoin-backed loans, outstanding to Mr. Bankman-Fried or any of his other entities. The bank’s lending on bitcoin has “zero losses and no forced liquidations.”

For its part, FTX kept some deposits at Silvergate in an omnibus account with the assets belonging to FTX clients, and it was FTX’s responsibility to run a ledger, not Silvergate’s. This is a standard procedure for firms that are not banks themselves. Silvergate can’t take direct moves with FTX’s omnibus account, and even if FTX will take the funds back, Silvergate reassures its clients “it is structured to protect itself from huge outflows.”