As the fallout from the stunning collapse of Silicon Valley Bank (SVB) plays out, numerous crypto companies have already signaled their exposure to the bank, which long maintained a reputation as one of the most prominent lenders to tech start-ups in the world.
The bank’s closure Friday by the California Department of Financial Protection marked the second-largest bank failure in American history after the undoing of Washington Mutual during the financial crisis of 2008. Silicon Valley Bank reported $212 billion in assets last quarter.
The stock (SIVB) began spiraling late Wednesday after rumors circulated that the institution was seeking an acquisition after failing to raise sufficient capital to cover its obligations. In the hours and days that followed, numerous venture capital funds reportedly advised their clients to withdraw funds from the bank, which had its shares halted on Friday morning by the Nasdaq.
Though it was venture capital firms and tech startups that were most severely affected by SVB, numerous crypto companies have also disclosed their exposure to the bank.
Here’s a running list of the crypto firms caught in the crosshairs of SVB’s collapse, along with those that have publicly claimed they avoided the damage.
Decrypt will continue to update this list as more companies disclose their exposure.
Crypto companies that had money in SVB
BlockFi
Failed crypto lender BlockFi, which filed for bankruptcy in November in the wake of FTX’s collapse, has $227 million in funds held at SVB, according to documents filed Friday related to BlockFi’s bankruptcy proceedings. Those funds are reportedly not insured by the Federal Deposit Insurance Commission (FDIC) as they are in a money market mutual fund, which itself may constitute a violation of bankruptcy law.
BlockFi first halted withdrawals just days after the implosion of crypto exchange FTX. The lender had previously been bailed out by FTX with a revolving $250 million line of credit, last June.
Per new bankruptcy filing, BlockFi has $227m in Silicon Valley Bank. The bankruptcy trustee warned them on Mon that bc those funds are in a money market mutual fund, they’re not FDIC secured — which could be a prblm w/ keeping in compliance of bankruptcy law pic.twitter.com/hnpo8anrrS
— Lauren Hirsch (@LaurenSHirsch) March 10, 2023
Circle
Circle, issuer of the world’s second-largest stablecoin USDC, announced on Friday that some undisclosed portion of the cash reserves used to back USDC and tie its value to the US dollar were held at Silicon Valley Bank.
The company said in a statement Friday that SVB was one of six banks relied on to manage USDC’s cash reserves, but claims USDC will be able to continue operating normally.
Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally.https://t.co/NU82jnajjY
— Circle (@circle) March 10, 2023
Stablecoins like USDC are cryptocurrencies backed by and pegged to the value of real-world assets. They are meant to serve as a sturdy intermediary between traditional finance and more volatile crypto markets; USDC, with a market capitalization of $42.17 billion, is the second-most used stablecoin in the world. 25% of the assets backing USDC, which purports to be fully collateralized, are cash, according to Circle.
Last week, Circle cut ties with collapsed crypto-friendly bank Silvergate, which shut down on Wednesday. Circle had also used Silvergate to hold cash reserves until that point.
Pantera
Crypto-focused venture capital firm Pantera may have an unknown amount of exposure to SVB’s collapse. As recently as last month, the firm counted the failed bank among just three custodians of its private funds, according to a February 3 SEC filing.
Pantera counts among the largest crypto-focused VC firms in the world; last year alone it raised $1.3 billion for a fund exclusively focused on blockchain-based projects.
Avalanche
The Avalanche Foundation, which supports the Avalanche blockchain, announced Friday evening that it has “a little over” $1.6 million in exposure to Silicon Valley Bank.
Avalanche’s native token AVAX, currently boasts a market capitalization of $4.84 billion.
In light of recent news, we would like to confirm that the Avalanche Foundation has no exposure to Silvergate and a little over $1.6mm of exposure to Silicon Valley Bank. Avalanche Foundation is saddened by the news about SI and SIVB, and hope that all depositors are made whole.
— Avalanche 🔺 (@avalancheavax) March 10, 2023
Yuga Labs
Yuga Labs, the $4 billion company behind dominant NFT collection Bored Ape Yacht Club (among other projects), is exposed to SVB. Yuga co-founder Greg Solano said Friday that the company has “super limited exposure” to the failed bank, though Yuga has not yet confirmed exactly how much.
Solano said the amount “doesn’t impact our business or plans in any way.”
Proof
Proof, another leader in NFTs, may have been hit harder. The Web3 project created by Digg co-founder Kevin Rose, which is behind leading NFT collection Moonbirds, issued a statement Friday confirming the company holds cash as Silicon Valley Bank.
“Proof holds cash at SVB, however… We’ve thankfully diversified our assets across ETH, stablecoins, as well as fiat,” the company Tweeted Friday.
Proof has not yet disclosed what amount of cash it has tied up with SVB. While the company conceded that SVB’s collapse “sucks,” it also insisted the potential loss wouldn’t affect the security of customer’s assets, or Proof’s roadmap.
2/5: In the spirit of transparency, here’s everything we know about the situation with SVB:
Proof holds cash at SVB, however…
We’ve thankfully diversified our assets across ETH, stablecoins, as well as fiat—so financially and operationally, we’re going to be OK.
— PROOF (🥃,🦉) (@proof_xyz) March 10, 2023
Nova Labs
Nova Labs, the startup behind decentralized network and internet provider Helium, disclosed exposure to SVB late Friday.
“Nova Labs has some $ stuck in SVB, but the vast majority is in other institutions, Nova Labs CEO and Helium co-founder Amir Haleem said.
incredible that (3,3) really was the right strategy@novalabs_ has some $ stuck in SVB, but the vast majority is in other institutions
I feel terrible for all the other founders and startups who were not so fortunate. hoping for a speedy resolution 🙏🏽
— amir 🎈 (@amirhaleem) March 11, 2023
Crypto companies claiming no exposure to SVB
Numerous crypto companies have also rushed to declare their lack of exposure to Silicon Valley Bank, in attempts to stave any potential additional panic.
Tether, the company behind the world’s largest stablecoin, USDT, announced Friday that it had no exposure to SVB’s collapse. USDT has a market capitalization of $72.38 billion.
Anatoly Yakovenko, co-founder of the Solana blockchain, claimed that neither Solana Labs nor the Solana Foundation had any exposure to SVB.
Neither labs or foundation banked at svb. Dodged another bullet.
— toly 🇺🇸 (@aeyakovenko) March 10, 2023
Ryan Wyatt, president of Polygon Labs, the company behind Ethereum scaling solution Polygon, similarly announced that no Polygon-affiliated companies or foundations had any exposure to SVB.
Sad day for a lot of companies who are going through the collapse of SVB, and my heart goes out to all these startups exposed to this.
I am grateful that we had no relationship with SVB, and have escaped these bank failures unscathed.
— Ryan Wyatt 💜 (@Fwiz) March 11, 2023
Other companies that announced no exposure to SVB on Friday include Blur, the emergent NFT marketplace, Ledn, the crypto lending platform, crypto wallet Phantom, and DeLabs, the company behind top NFT collections DeGods and Y00ts.
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Source: https://decrypt.co/123199/silicon-valley-bank-crypto-companies-contagion
