Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-NY) were two US lawmakers were interested in finding out why cryptocurrency businesses BlockFi and Circle banked at the collapsed Silicon Valley Bank.
With a list of questions and concerns, the lawmakers wrote to BlockFi and Circle on Sunday, April 9th, and they also sent similar letters to twelve other non-crypto companies.
Democratic lawmakers are interested in the “mutual back scratching dynamic” between venture capitalists and SVB, whereby the bank offered VCs and other wealthy depositors large lines of credit and lavish “white glove” services like “industry ski trips, conferences, and fancy dinners.”
When the bank failed last month after a $42 billion single-day run, the senators contend that by providing the proverbial champagne service, federal regulators were finally forced to pay $20 billion to stop the withdrawals.
About $3.5 billion in uninsured deposits were held by the two companies (Circle and Blockfi) at SVB, of which Circle alone was in charge of $3.3 billion.
Questions about the history of Allaire and Prince’s interactions with SVB, including the amounts of money they deposited and kept on deposit at the bank and the types of investments made between the businesses, their affiliated businesses, and SVB, have been posed to them.
Additionally, they have been contacted by SVB in order to provide details regarding the alleged “coddling” of any of their executives or board members.
The details include any financial connections the executives may have with SVB, any outings that SVB sponsored, and any instances in which executives voiced internal concerns about SVB’s exposure to uninsured assets.
Compiled by Coinbold