California-based Silicon Valley Bank (SVB), a unit of SVB Financial Group, has been closed, according to an announcement from financial regulators on March 10.
Silicon Valley Bank closed by regulators
The Federal Deposit Insurance Corporation (FDIC) said the California Department of Financial Protection and Innovation closed SVB today.
The FDIC said it had been appointed as receiver and added that eligible bank customers will have access to insured deposits by March 13.
Although the FDIC did not describe the course of events that led to SVB’s closure, the bank’s collapse was prompted by a March 8 put-forward in which it sought to cover a loss of 1. $8 billion. The company’s stock value fell 60% from $267.83 to $106.4 in one day.
It led to a bank run after third parties advised businesses to withdraw funds on March 10. Trading in the company’s shares has since been halted.
The company had $209 billion in assets, making it the second-largest U.S. bank failure in history and the largest bank failure since the 2008 financial crisis.
Crypto companies may be exposed
Although Silicon Valley Bank is not directly related to the crypto industry, some crypto companies may have exposure to the failing bank.
Circle held funds with various banks, including Silicon Valley Bank as recently in january. However, the company recently transferred funds between banks, according to TechCrunchand it may or may not hold funds with SVB at this time.
While it’s unclear exactly how much money Circle might hold with Silicon Valley Bank, it holds a quarter of its USDC reserves ($11 billion) in banks.
Elsewhere, bankrupt lending firm BlockFi was reportedly exposed to SVB. The US administrator said in a filing on March 10 that BlockFi holds $227 million with the bank. It says these funds are “unprotected” and require a bond or deposit under the bankruptcy code.
Other companies deny exposure
Binance CEO Changpeng Zhao said his exchange company has no exposure to Silicon Valley Bank. He tweeted: “Funds are #SAFU.”
John Wu, president of Avalanche company Ava Labs, also commented on the situation. During the initial bank run on March 9, Wu said that Silicon Valley Bank is a bank that his business relies on. Rather than withdrawing all funds from the bank, he said Ava Labs had diversified and held less with SVB than in previous weeks and months.
Robbie Ferguson, co-founder of Immutable Labs says that his company has no exposure to Silicon Valley Bank or the bankrupt Silvergate Bank. Immutable is known for its Immutable X blockchain and focuses on web3 games.
Elsewhere, asset manager Valkyrie says that it has no exposure or banking relationship with Silicon Valley Bank. He nevertheless called the news “devastating”.
The Blockchain Intelligence Group (BIGG) and its Canadian crypto-trading platform Netcoins also denied any exposure to the failing bank.