Silvergate Bank Must Pay Back $9.85 Million To BlockFi In Reserve Account

Key Points:

• On Friday, a U.S. bankruptcy judge announced that Silvergate Bank must pay $9.85 million to crypto lender BlockFi.
• After filing for bankruptcy in November, BlockFi began negotiations with Silvergate to release the $10 million deposited in the bank’s reserve account.
• The Judge’s request comes when the crypto-friendly bank is struggling with liquidity problems.

According to The Block, according to court documents on Friday, U.S. bankruptcy judge Michael B. Kaplan announced that Silvergate Bank must pay $9.85 million back to crypto lender BlockFi.

BlockFi filed for bankruptcy protection in November 2022. Shortly after the filing, BlockFi began negotiations with Silvergate to release the $10 million it had deposited into the bank’s reserve account.

The two sides reached an agreement this Friday, and Silvergate will return most of the money within two business days.

As per previous news, Silvergate Capital Corporation stated in a document filed with the U.S. Securities and Exchange Commission (SEC) that the company might be “undercapitalized” and that it is “reassessing its business.”

Silvergate has faced problems of its own this week. In addition to capitalization issues, the La Jolla, California-based bank said in a filing with the Securities and Exchange Commission Wednesday that it faces “multiple lawsuits (including the lawsuits) and regulatory inquiries and investigations as well as other investigations against or relating to the Company, investigations from our banking regulators, national inquiries association and investigations from the United States Department of Justice.”

Many big names in the crypto space in the United States have announced they are severing ties or asserting that they have no relationship with Silvergate Bank due to a series of lawsuits and investigations. Companies such as stablecoin issuers Paxos and Circle and Mike Novogratz’s Galaxy Digital, Gemini and BitStamp have announced similar actions regarding their partnerships with crypto banks.

As an earlier Coincu News article updated, Market Maker Giant Citadel Securities may be coming to the rescue of the crypto bank as it is on the verge of bankruptcy. Citadel currently holds about 5.5% of Silvergate Bank.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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