The two US lawmakers, Sen. Elizabeth Warren (D-Mass) and Rep. Alexandria Ocasio-Cortez (D-NY) were interested in finding out why cryptocurrency businesses BlockFi and Circle banked at the collapsed Silicon Valley Bank.
With a list of questions and concerns, the lawmakers wrote to BlockFi and Circle on Sunday, April 9th, and they also sent similar letters to twelve other non-crypto companies.Â
The venture capitalists and SVB engaged in a “mutual back scratching dynamic,” whereby the bank provided VCs and other high-rolling depositors with expansive lines of credit and opulent “white glove” services like “industry ski trips, conferences, and fancy dinners,” which has piqued the interest of Democratic lawmakers.
The senators claim that by providing the metaphorical champagne service, federal regulators were finally compelled to pay $20 billion to stop the withdrawals when the bank failed last month following a $42 billion single-day run.
The two firms (Circle and Blockfi) held approximately $3.5 billion in uninsured deposits at SVB, of which Circle alone was responsible for $3.3 billion.Â
Also Read: USDC Faces De-peg after disclosing $3.3B Deposit in SVB
Allaire and Prince have been asked to answer questions regarding the history of their dealings with SVB, including the sums of money they put and kept on deposit at the bank and the nature of the investments made between the companies, their affiliated companies, and SVB.
They have also been asked to provide information regarding the alleged “coddling” of any of their executives or board members by SVB.
The information includes specifics about any financial ties the executives have with SVB, any trips that SVB sponsored, and whether any executives have ever raised a concern internally regarding SVB’s exposure to uninsured assets.
