On Friday, the Silicon Valley Bank (SVB) Financial Group filed for Chapter 11 Bankruptcy protection. In order to find buyers for its assets, the bank voluntarily petitioned the United States Bankruptcy Court for the Southern District of New York for a Chapter 11 court-supervised reorganization.
According to an announcement made on March 17, SVB Securities and SVB Capital’s funds and general partner entities are not involved in the bankruptcy proceedings. As the Silicon Valley Bank Financial Group continues to look into strategic options for its businesses, the entities will continue to function as usual.
Also, the SVB Financial Group made clear that it was no longer associated with Silicon Valley Bank N.A. or SVB Private, the bank’s private financial and wealth management division. The FDIC is in charge of the bank’s successor, Silicon Valley Bridge Bank, N.A., which is not a participant of the Chapter 11 petition.
The Collapse of Silicon Valley Bank
The news comes after the Bank of England (BoE) shut down Silicon Valley Bank’s branch in the UK due to its “limited presence.” Circle, an issuer of USDC, and BlockFi, a bankrupt cryptocurrency lender, both made announcements saying they had money invested in the recently closed bank.
Following the current failure of three major banks in the country, many consumers are experiencing hardships. Silvergate Bank said last week that it is voluntarily liquidating its assets and choosing to shut down operations after suspending its exchange network for digital assets.
Almost the same time as SVB’s fall, Signature Bank was also closed by the New York Department of Financial Services. Some US government representatives advised traditional banks to avoid investing in cryptocurrency firms in light of the current circumstances.
The founder of Cardano, Charles Hoskinson, also posted a statement on Twitter highlighting the necessity for cryptocurrencies to break their links with traditional banking. These banks adapted their money for the majority of cryptocurrency enterprises, firms, and exchanges. Currently, they would need to find different financial institutions.