Silvergate Bank to release nearly $9.9 million to BlockFi

Quick Take

  • Silvergate Bank has agreed to release close to $9.9 million to crypto lender BlockFi on Friday. A U.S. bankruptcy judge agreed with the stipulation and ordered the release. 
  • This comes days after Silvergate said it was in the “process of reevaluating its business strategies” and facing capital problems. 

A bankruptcy judge has ordered Silvergate Bank to release nearly $9.9 million to crypto lender BlockFi, days after the bank said it was “reevaluating its business” and could be "less than well-capitalized," which led to a swarm of companies severing ties with the bank. 

U.S. Bankruptcy Judge Michael B. Kaplan said Silvergate had to return $9,850,000 deposited by BlockFi, according to a court filing on Friday.  

BlockFi filed for bankruptcy protection in November 2022. Soon after filing, BlockFi began negotiating with Silvergate for the release of $10 million in a reserve account held at the bank, and it reached an agreement on Friday for the bank to release a majority of those funds within two business days. 

Silvergate has faced its own issues this week. In addition to capitalization problems, the La Jolla, Calif.-based bank said in a Securities and Exchange Commission filing on Wednesday that it faces, "various litigation (including private litigation) and regulatory and other inquiries and investigations against or with respect to the Company, investigations from our banking regulators, congressional inquiries and investigations from the U.S. Department of Justice." 


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That's led to a raft of customer departures from the bank that built itself a position in the center of much of the U.S. crypto industry. Customers began dropping the next day, including Coinbase, Circle, Paxos and Gemini, some citing their moves were made out of an “abundance of caution.”  


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About Author

Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.


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