Silicon Valley Bank has failed, leading to many losses in the tech startup industry. The event has also impacted at least two companies in the crypto industry.
What Happened to Silicon Valley Bank?
On March 8, Silicon Valley Bank (SVB) announced that it would raise funds by selling shares to cover a $1.8 billion loss. This caused the value of its shares to decline.
Client companies were advised by third parties to withdraw their funds, leading to a bank run. SVB soon attempted to reassure customers of its stability.
However, the FDIC ultimately announced the bank’s closure on Friday, March 10. The agency said that it will act as receiver and provide access to insured funds by Monday, March 13. The FDIC provides insurance on deposits up to $250,000.
Silicon Valley Bank reportedly had $175 billion in customer deposits. Most of those depositors were non-crypto startups. The media streaming company Roku notably held a quarter of its cash, amounting to $487 million, with the bank.
Other companies that used SVB include the online gaming company Roblox, the video-sharing company Vimeo, the and news and media company Vox Media.
During the initial bank run, shares declined rapidly, falling 60% between Thursday and Friday. Trading of Silicon Valley Bank shares was halted on Friday.
Which Crypto Companies Were Affected?
Although Silicon Valley Bank did not primarily serve crypto companies, some crypto firms were affected while others reported that they had no relationship.
Stablecoin issuer Circle said on March 10 that it held $3.3 billion of USDC reserves with the bank. The price of its USDC stablecoin fell from $1.00 to $0.86 within hours of that news. Circle has stated that it will cover the $3.3 billion shortage, and the price of USDC has partially recovered to $0.97 as of Sunday, March 12.
Elsewhere, U.S. officials have estimated that the failed lending firm BlockFi held $227 million with SVB. That number was revealed as part of BlockFi’s bankruptcy case.
Ava Labs, which develops the Avalanche blockchain, and multiple crypto VC firms likely have an unknown amount of assets with SVB as well.
Other crypto firms including Binance, Immutable Labs, Valkyrie Investments, and Netcoins have denied any exposure to the failed bank.
SVB’s failure follows the collapse of Silvergate, which halted all operations on March 8 and announced that it would liquidate all assets. The two events are unrelated.