The 16th largest bank in the U.S., Silicon Valley Bank, was shut down by the California Department of Financial Protection and Innovation (DFPI).
The SVB shares had gone down by 60 percent the previous day following the bank’s announcement that it had plans to sell a billion worth of stock to shore up its balance sheet.
The crypto companies that have deals with the Silicon Valley Bank were Yuga Labs, Avalanche, Proof, Circle, and BlockFi.
The shutdown of the bank is recorded as the second largest bank failure in the United States of America, while the first one was the 2008 undoing of Washington Mutual.
Crypto Companies With Exposure To Silicon Valley Bank
The Avalanche Foundation
Ethereum’s rival blockchain Avalanche blockchain is backed by the Avalanche Foundation.
The foundation announced its exposure to SVB in an official Twitter post.
The tweet read that the foundation would like to confirm that it has a little over 1.6 mm of exposure to Silicon Valley Bank.
The confirmation came as the news was filled with the stock crash of the bank. The post further said that Avalanche Foundation does not have any exposure to Silvergate.
Circle
Circle is an American peer-to-peer payments technology company that issues USD Coin (USDC, the digital stablecoin), which is the second largest stablecoin in the world.
Circle also proceeded to Twitter, like others, to announce that it had funds held at SVB.
The tweet read that Silicon Valley bank was one of the banking partners that Circle has been using for the management of an approximate 25 percent portion of the USDC reserves held in cash.
The tweet also read that the company was analyzing the impact the FDIC receivership of SVB would have on its depositors and that meanwhile, Circle and USDC would continue to operate normally.
BlockFi
BlockFi, the defunct crypto and digital asset lender, has uninsured funds worth 227 million US dollars in SVB. The fund was provided by the bank to the crypto lender for an MMMF (money market mutual fund).
BlockFi filed for bankruptcy last November in relation to the collapse of FTX. The lender’s MMMF fund in SVB came ut from the details it provided in the filings related to the bankruptcy procedure.
The 227 million US dollars are not insured by the Federal Deposit Insurance Commission (FDIC).
Lauren Hirsch, the CNBC reporter, tweeted on her Twitter account that BlocFi has $227 million in SVB as per the former’s new bankruptcy filing. The crypto lender was warned by the bankruptcy trustee as the funds were not FDIC secured as they were in a money market mutual fund. She further wrote that this whole thing could appear as a violation of bankruptcy law.
Yuga Labs
Yuga Labs, the creator of the NFT collection Bred Ape Yacht Club (BAYC) also announced its exposure to SVB.
Greg Solano, popularly known as Garga, the co-founder of Yuga Labs, said that the company has super limited financial exposure to SVB.
He then said that the exposure, however, would not impact Yuga Labs’ businesses or plans.
Proof
Proof Collective, the creator of the NFT collection Moonbirds, is a Web3 project.
Proof announced that it holds cash at SVB. The details about the amount or percent of cash were not revealed. The company said that the cash hold would not impact its roadmap or the security of the client’s assets that it holds.
The announcement came through the Twitter handle of the company.
Other companies that announced their exposure were Pantera Capital, an American crypto-focused hedge fund; and Nova Labs, the creator of the open-source Helium network.
Crypto Companies With No Exposure To Silicon Valley Bank
While some of the giant crypto companies stated exposure to SVB, some others announced no exposure to SVB.
The companies that announced no exposure to SVB are Polygon Labs, Blur, Phantom, Tether, Delabs, Solana Foundation, Solana Labs, and Ledn.
SVB had the role of the banking partner for multiple venture capital firms and Silicon Valley startups that included Sequoia Capital and Andreessen Horowitz.
Also Read:- BlockFi Held Uninsured $227M In Silicon Valley Bank, Filing Shows
The U.S. Crypto Market: What Will Happen In The Coming Days?
What Do Experts Have To Say?
Conor Ryder, a research analyst at Kaiko, a research firm in Paris, opined that the U.S. crypto exchanges were currently suffering the most liquidity-wise. He added that bank deposits that aided to fund crypto in U.S. markets were shrinking.
He further added that as the crypto firms had started to look outside of America for banking partners, the investors were on a wait-and-see approach.
Joy Yang the head of Index Product Management at MarketVector, a crypto research firm, said that the driving force that caused the decline in the crypto prices was the macroeconomic pressures in the market.
Yang continued that as investors and traders have more confidence in Fed movements and market outlook, a refocus on fundamentals and growth valuations is to be expected.
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