BlockTower Investment Funds Connected to Silvergate, Signature Banks

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Four private funds of crypto asset manager BlockTower Capital had accounts with now-defunct Signature Bank and Silvergate Bank, according to the most recent regulatory filing from the investment adviser. The funds represented a collective of $940 million in gross asset value.

On March 8, crypto-friendly Silvergate Bank declared it would be liquidating its assets and ceasing operations after facing questions from its independent auditors and accounting firm over the financial figures. Two days later, tech-favored Silicon Valley Bank was shut down by California regulators due to insolvency concerns. Finishing the trifecta of bank collapses, New York-based Signature Bank – a former crypto-friendly institution that began limiting industry exposure last year – was terminated by state regulators on March 12 in order “to protect depositors.”

According to the Form ADV Filing dated May 11, 2022, the BlockTower Blue Signum SPV fund, with a gross asset value of $4.6 million, used Silvergate Bank as its sole custodian. The BlockTower DeFi SPV I fund ($74.6 million) likewise listed only Silvergate, while the BlockTower Gamma Point Master Fund ($89 million) had Signature Bank as the custodian.

BlockTower Capital Partners Master Fund ($770.5 million in gross assets) was the most diversified, listing five custodians: Silvergate, Signature Bank, the trust services of Anchorage Digital and Coinbase, and Celadon Financial Group.

The date on the filing indicates that BlockTower Capital could have swapped custodians since then. CoinDesk reached out to BlockTower for comment but had not received a response by publication time.

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