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Silvergate to return $9.85M deposit to BlockFi

Silvergate Financial institution has been ordered to return $9.85 million to BlockFi as a part of the latter agency’s ongoing chapter proceedings, based on a March 3 submitting.

BlockFi will see $9.85 million returned

That court docket submitting says BlockFi and Silvergate entered an settlement in August 2020 the place Silvergate acted as a depository establishment to deal with sure ACH transactions. In November 2021, BlockFi agreed to determine a reserve containing $10 million.

The settlement said that the account would terminate 90 enterprise days after the final related switch, granting BlockFi unrestricted entry to these funds.

Because of this, Silvergate is now compelled to launch $9.85 million from the reserve account. It’s permitted to carry the remaining $150,000 within the reserve account.

The court docket order is a part of BlockFi’s ongoing chapter proceedings. The crypto lending agency filed for chapter in November 2022. It has greater than 100,000 collectors and owes between $1 billion and $10 billion to these collectors.

The connection between BlockFi and Silvergate

After BlockFi filed for chapter in November 2022, Silvergate mentioned that it had lower than $20 million of publicity to BlockFi. It additionally mentioned that it was not a custodian for BlockFi’s Bitcoin-collateralized SEN Leverage loans and had no investments in BlockFi.

The 2 firms however maintained a detailed relationship. BlockFi referred to as Silvergate a “banking accomplice” on Nov. 10 and mentioned that it will halt ACH and wire processing for 3 days because of Silvergate’s observance of a vacation. Later that very same day, BlockFi introduced that it will halt withdrawals indefinitely because of FTX’s separate collapse.

This week’s court docket order compelling the return of funds is seemingly unrelated to a latest controversy round Silvergate. On Mar. 1, Silvergate mentioned that it will delay its 10-Ok submitting and alluded to varied ongoing regulatory investigations.

That growth led a number of main crypto firms to distance themselves from the crypto-friendly financial institution. BlockFi didn’t touch upon Silvergate’s points this week.

Posted In: Chapter, Lending



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