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.
That court filing says BlockFi and Silvergate entered an agreement in August 2020 where Silvergate acted as a depository institution to handle certain ACH transactions. In November 2021, BlockFi agreed to establish a reserve containing $10 million.
That agreement stated that the account would terminate 90 business days after the last relevant transfer, granting BlockFi unrestricted access to those funds.
As a result, Silvergate is now compelled to release $9.85 million from the reserve account. It is permitted to hold the remaining $150,000 in the reserve account.
The development is seemingly unrelated to a recent and broader controversy around 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.
The court order is instead part of BlockFi’s ongoing bankruptcy proceedings. The crypto lending firm filed for bankruptcy in November 2022. It has more than 100,000 creditors and owes between $1 billion and $10 billion to those creditors.
