Alexandria Ocasio-Cortez and Elizabeth Warren hunt crypto companies to inquire about SVB deposits
US senators are demanding answers from crypto companies about their ties to the collapsed Silicon Valley Bank (SVB).
In an open letter to 14 of SVB’s biggest customers, Massachusetts Senator Elizabeth Warren and New York Senator Alexandria Ocasio-Cortez (AOC) ask about what they see as a “cozy relationship” between the bank and its depositors.
Among the firms addressed in the letter were USDC issuer Circle and crypto lending platform BlockFi. Circle had $3.3 billion of its $40 billion in reserves deposited with SVB, and after the bank’s collapse, the USDC experienced a brief delinking from the dollar.
Now Warren and the AOC want to know who in Circle, specifically, made the decision to deposit the funds to SVB, plus seven other questions.
They also want to know what the “reasoning” was for the decision and whether Circle or its directors ever raised concerns about the company holding such a large amount of non-FDIC-insured assets.
It says in the letter,
“According to press reports, your own company disclosed that it held $3.3 billion of its crypto reserves with SVB. These large balances meant that the vast majority of SVB’s deposits were uninsured by the Federal Deposit Insurance Corporation (FDIC), increasing the danger of systemic contagion .if regulators had failed to step in to guarantee all accounts.
Congress, banking regulators, and the public owe an explanation for the bank’s hyper-reliance on technology industry firms and investors, the extent to which this resulted in an abnormally high percentage of deposits not insured by the FDIC, and the role that companies like yours may have played on the fringes of 42 billion dollars in one day at SVB.12 Obtaining information about these factors is important to understanding how SVB failed and how to prevent the next failure.”
The senators give the companies addressed in the letter until April 24 to answer the questions.
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Featured image: Shutterstock/Yurchanka Siarhei/Natalia Siiatovskaia
