American cryptocurrency infrastructure services provider Silvergate Capital has revealed that its exposure to the now-bankrupt crypto lender BlockFi is minimal, contrary to rumours making the rounds.

Silvergate’s Deposit in BlockFi Is Less Than $20M

According to a press release, Silvergate said that its deposit relationship with BlockFi is “limited to less than $20 million of its total deposits from all digital asset customers as of November 28, 2022,” when the latter filed for bankruptcy.

Recall that BlockFi filed for voluntary Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey on Monday due to the effects of the collapse of crypto exchange FTX.

Crypto Saving Expert reported that BlockFi had a massive exposure to bankrupt FTX as the $400 million revolving credit facility deal between them failed alongside the exchange. The deal was FTX’s attempt to rescue BlockFi after the Terra contagion heavily impacted the crypto lender in May.

In the wake of BlockFi’s bankruptcy filing, speculation arose concerning Silvergate’s exposure to the lender. Silvergate refuted such claims, calling them “false and misleading statements” and directing the community to its website and filings with the Securities and Exchange Commission (SEC) for “factual and accurate information.”

Silvergate Has No Investments in BlockFi

Furthermore, Silvergate said it has no investments in BlockFi. The firm disclosed that its Bitcoin-collateralized Silvergate Exchange Network (SEN) leverage loans are not in the custody of the embattled crypto lender.

The crypto bank also stated that it has a priority lien and security interest in a $10 million cash collateral account, which supports its ACH services provided to BlockFi.

Alan Lane, CEO of Silvergate, said:

“As the digital asset industry continues to transform, I want to reiterate that Silvergate’s platform was purpose-built to manage stress and volatility. The SEN continues to operate as designed, and our support teams are available 24 hours a day, 7 days a week to help our customers during this period of adversity.”

（By William A. Frederick）