Filing Shows BlockFi Has Uninsured $227M in Silicon Valley Bank Fund

A recent filing with the Securities and Exchange Commission (SEC) revealed that BlockFi's capital allocation to the money market mutual fund affiliated with Silicon Valley Bank is no longer FDIC insured. The filing, dated November 4, 2020, indicated that the fund “is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency”.

BlockFi is a financial services provider that offers a variety of services to its users, including cryptocurrency-backed loans and stablecoin payments. The company has raised over $285 million in venture capital, according to its Crunchbase profile, and has become a major player in both the cryptocurrency and traditional finance spaces.

The filing showed that BlockFi had $227 million in assets allocated to the fund, indicating that it is the company’s largest financial asset. In light of the filing, it appears that the fund is not managed by Silicon Valley Bank, as previously thought.

BlockFi is not the only crypto-focused firm that has been seeking to diversify its capital. Binance, the largest cryptocurrency exchange platform by trading volumes, is reportedly looking to allocate much of its $500 million cash reserves towards the money market fund.

The money market fund has been popularized among crypto firms and blockchain startups as many businesses look to achieve higher yields on their capital. Money market funds are low-risk investments that typically offer higher returns than traditional savings products, as well as the liquidity of cash.

It is unclear if BlockFi is attempting to diversify its portfolio away from the money market fund and towards other assets. The company has yet to comment on the filing or its capital allocation strategy going forward.

Summary

BlockFi’s capital allocated to the money market mutual fund is not FDIC insured; however, the fund doesn’t appear to be managed by Silicon Valley Bank. Firms such as Binance have also been allocating a large portion of their cash reserves to the same fund, which offers higher yields and liquidity than a traditional savings account.