BlockFi in no immediate danger, despite Silicon Valley Bank exposure: Report
Christine Okike, a lawyer representing BlockFi at its bankruptcy hearing claimed that BlockFi is not in immediate danger and has sufficient funds to continue operating normally.
According to a lawyer representing the bankrupt crypto lender BlockFi Inc.,the company is in a stable financial position with access to ample cash reserves, despite having over $200 million in exposure to Silicon Valley Bank, Bloomberg reported.
According to the report, BlockFi had $227 million invested in a money market mutual fund that Silicon Valley Bank marketed; nevertheless, the risk is probably related to the performance of the fund, not the bank's financials. https://t.co/xsgWgQRsLy
— Cointelegraph (@Cointelegraph) March 11, 2023
During a bankruptcy hearing on Monday, Christine Okike of Kirkland & Ellis claimed that BlockFi is not in immediate danger and has sufficient funds to continue operating normally, including paying employees and vendors.
Okike reportedly shared;
BlockFi is fine … We have access to cash to operate in the normal course, including paying employees and vendors.
Okike also noted that BlockFi expects to gain access to a significant portion of cash held with Silicon Valley Bank later in the day. The majority of BlockFi's exposure to Silicon Vally Bank is through third-party money-market mutual funds, which Okike claimed had no direct impact on the company's operations. The bankruptcy case in question is identified as BlockFi Inc., 22-19361, and is being heard in the US Bankruptcy Court for the District of New Jersey in Trenton.
Related: Silicon Valley Bank collapse: Everything that’s happened until now
On March 10, California's financial regulator shut down Silicon Valley Bank, a major financial institution catering to venture-backed companies. The shutdown makes it the first Federal Deposit Insurance Corporation-insured bank to fail in 2023.
On March 11, a bankruptcy filing revealed that defunct crypto lender BlockFi had $227 million worth of uninsured funds allocated to a money market mutual fund (MMMF) offered by the troubled Silicon Valley Bank (SVB).
As previously reported by Cointelegragh, Global banking giant HSBC has announced the acquisition of Silicon Valley Bank UK (SVB UK), a subsidiary of the now-collapsed Silicon Valley Bank, for just 1 British pound ($1.21). According to HSBC, as of March 10, 2023, SVB UK had loans worth around 5.5 billion pounds ($6.7 billion) and deposits of around 6.7 billion pounds ($8.1 billion).