BlockFi Still Has Access to Funds Despite Collapse of SVB: Lawyer

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Despite the failure of Silicon Valley Bank (SVB), BlockFi still has access to cash to pay staff and vendors, a lawyer for the crypto lender told a New Jersey bankruptcy court on Monday.

In a filing to the court last week, the U.S Trustee sought to move $227 million in uninsured funds from the now-shuttered lender, after California regulators shut down SVB.

Christine Okike of Kirkland and Ellis, representing BlockFi in court, assured that the company has the necessary funds to keep operations running. “We expect to have access to $37 million of the $278 million at SVB later today,” Okike declared.

The attorney explained that the remaining $236 million was invested in “highly rated money market funds” run by BlackRock and Morgan Stanley, with SVB acting as agent on behalf of BlockFi.

The Department of Justice’s U.S Trustee Andrew Vara had previously urged the crypto lender to shift the funds to somewhere with government protection from the Federal Deposit Insurance Corporation (FDIC). However, BlockFi’s lawyers argued that their credit ratings were sound and the investments were yielding $10 million per year for the estate.

Okike further assured the court that she will work with the U.S Trustee to ensure compliance with the bankruptcy code once the company regains access to the funds. On Monday morning, the FDIC said it had transferred SVB deposits to a newly established bridge bank.

BlockFi filed for bankruptcy in November 2020, following the collapse of crypto exchange FTX.

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