Circle and BlockFi Questioned Banking with SVB by Warren and AOC
Two members of Congress investigating alleged “mutual arrangements” with now-defunct Silicon Valley Bank questioned executives at stablecoin issuer Circle and cryptocurrency lender BlockFi that went bankrupt.
Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez (AOC) sent letters to Circle, BlockFi, and 12 other non-crypto technology companies on April 9 asking a series of questions about each company’s involvement with SVB.
The lawmakers indicated that more information regarding SVB’s alleged “pampering” and “white glove” treatment of its key depositors was needed to determine whether these companies played a role in SVB’s demise.
Circle and BlockFi CEOs Jeremy Allaire and Zac Prince were asked about the length of their financial interactions with SVB, amounts placed in banks, and what “agreements” were made between their companies.
Additionally, the couple was curious about whether SVB provided “perks” such as a low-interest mortgage or SVB-sponsored “ski trips, conferences, and fine dining.”
“Congress, bank regulators, and the public owe an explanation for the dependence of banks on technology industry companies and investors,” wrote Warren and AOC.
They also quizzed executives about “the role companies like yours might play in accelerating $42 billion one day runs on SVB.” “Obtaining information about these aspects is critical to understanding why the SVB failed and how to avoid similar failures in the future,” they wrote.
Warren and AOC believe it could explain why some customers, such as Circle, make unusually large amounts of uninsured deposits at SVB. Circle disclosed $3.3 billion in SVB accounts shortly after the bank failure, while BlockFi was found to have $227 million in uninsured deposits with banks.