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Silvergate Bank has been ordered to return $9.85 million to BlockFi as part of the latter firm’s ongoing bankruptcy proceedings, according to a March 3 filing.
This so-called blockfi and silvergate filing entered into an agreement in August 2020 in which silvergate acted as a deposit-taking institution to process certain transactions. In November 2021, the Blockfi agreed to set up a $10M reserve.
This agreement provided for the account to expire 90 business days after the last relevant transfer, granting unlimited access to these funds.
As a result, Silvergate is now required to make $9.85 million available from the contingency account. The remaining $150,000 is allowed to remain in the reserve account.
The development is apparently unconnected with a recent and wider controversy surrounding Silvergate. This week, Silvergate said that it would delay its 10-K filing and alluded to various ongoing regulatory investigations, which in turn led several major crypto companies to distance themselves from the crypto-friendly bank.
Rather, the court order is part of the bankruptcy proceedings currently in progress. The crypto lending firm filed for bankruptcy in November 2022. It has over 100,000 creditors and owes the government between $1 billion and $10 billion.
