Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) want to know why crypto companies, including bankrupt crypto lender BlockFi and stablecoin issuer Circle, banked at now-collapsed Silicon Valley Bank.
The lawmakers sent letters to BlockFi and Circle on Sunday with a list of questions and concerns. Twelve other non-crypto firms received similar letters.
The two Democratic lawmakers are looking for more information on what they call the “mutual backscratching dynamic” between SVB and venture capitalists, in which the bank treated VCs and other high-rolling depositors to extensive lines of credit and luxurious “white glove” services like “industry ski trips, conferences and fancy dinners.”
The proverbial champagne service, the lawmakers argue, “could help explain why some customers placed massive, uninsured deposits at SVB” – which ultimately forced federal regulators to spend $20 billion to staunch the flow of withdrawals when the bank collapsed after a $42 billion single-day run last month.
Source: Sen. Warren, Rep. Ocasio-Cortez Ask Circle, BlockFi Why They Banked at Silicon Valley Bank