A U.S. bankruptcy judge has ordered Silvergate Bank to release nearly $9.9 million to crypto lender BlockFi, which had filed for bankruptcy protection in November 2022. The order came days after Silvergate said it was “reevaluating its business” and might be “less than well-capitalized,” leading to several companies severing ties with the bank.
Settlement Agreement Reached
BlockFi negotiated with Silvergate for the release of $10 million in a reserve account held at the bank, and on Friday, it reached an agreement with Silvergate to release a majority of those funds within two business days. U.S. Bankruptcy Judge Michael B. Kaplan approved the agreement and ordered Silvergate to return $9,850,000 deposited by BlockFi, according to a court filing.
Silvergate Bank Faces Regulatory Issues and Customer Departures
In addition to capitalization problems, the La Jolla, Calif.-based bank disclosed in a Securities and Exchange Commission filing on Wednesday that it faces various litigation, regulatory and other inquiries and investigations. The bank’s troubles have led to several customer departures, including Coinbase, Circle, Paxos and Gemini, which cited an “abundance of caution” as the reason for their moves.
Source: The Block
