The Block: Silvergate Capital reports less than $20 million in BlockFi deposit exposure

Crypto bank Silvergate Capital said that less than $20 million of its total deposits from crypto customers come from lender BlockFi, adding that it has "minimal" exposure to the company now in bankruptcy proceedings.

BlockFi filed for Chapter 11 bankruptcy protection early Monday, disclosing that it has more than 100,000 creditors and assets and liabilities of between $1 billion and $10 billion. BlockFi announced it was suspending withdrawals on Nov. 10 — a day before crypto exchange FTX filed for Chapter 11 bankruptcy — and last week said it would put client loans into forbearance.

"BlockFi is not a custodian for Silvergate’s bitcoin-collateralized [Silvergate Exchange Network] Leverage loans, which to date have continued to perform as expected with zero losses and no forced liquidations," Silvergate said in a statement. "Silvergate has no investments in BlockFi."

Silvergate added that it "maintains a first priority lien and security interest in a cash collateral account, which contains $10 million for the benefit of Silvergate to support ACH (Automated Clearing House) services provided to BlockFi."

Silvergate previously said its exposure to bankrupt crypto exchange FTX was limited to deposits, with FTX representing less than 10% of its total deposits as of Sept. 30.

“As the digital asset industry continues to transform, I want to reiterate that Silvergate’s platform was purpose-built to manage stress and volatility,” Silvergate chief executive officer Alan Lane said in a statement. “The SEN (Silvergate Exchange Network) continues to operate as designed, and our support teams are available 24 hours a day, 7 days a week to help our customers during this period of adversity.”

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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