Silvergate Bank Ordered To Return IDR 150 Billion To BlockFi In Bankruptcy Process

Silvergate will return BlockFi funds. (Photo; Doc. CryptoActu)

JAKARTA - BlockFi will receive a refund of $9.85 million from Silvergate Bank as part of the company's bankruptcy process. On March 3, a court filing stated that BlockFi and Silvergate had approved an agreement in August 2020, in which Silvergate acted as a depository institution to handle several ACH transactions.

Then in November 2021, BlockFi agreed to form a reserve containing 10 million US dollars (IDR 153 billion). The agreement states that the account will expire 90 working days after the last transfer, granting BlockFi unrestricted access to the fund. As a result, Silvergate is now forced to release 9.85 million (IDR 150 billion) from the reserve account and is allowed to store the remaining 150,000 US dollars (IDR 2.3 billion).

This obligation is part of the ongoing BlockFi bankruptcy process. The crypto lending company filed for bankruptcy in November 2022, owns more than 100,000 creditors, and owes between $1 billion and USD 10 billion (IDR 15 trillion) to creditors.

Even though BlockFi filed for bankruptcy, Silvergate Bank remains in close ties with the company. On November 10, BlockFi called Silvergate a "bank partnership" and announced that the ACH processing and wire process would be suspended for three days as Silvergate celebrated holidays.

Then on the same day, BlockFi announced that it would stop the withdrawal of funds indefinitely due to the fall of a separate FTX.

Despite some recent controversy involving the Silvergate Bank, the refund appears to be unrelated to the matter. On March 1, Silvergate announced the postponement of 10-K submissions and underwent several regulatory investigations. This has led several large crypto companies away from the crypto-friendly bank.

The settlement agreement between BlockFi and Silvergate Bank has been around since last year, in which this refund was carried out amid the ongoing BlockFi bankruptcy process. Even so, it is not known whether this refund could help speed up the bankruptcy process or not.