Over a month after the collapse of Silicon Valley Bank, United States lawmakers continue to investigate the relationship between the bank and crypto firms.
Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez (AOC) had questioned executives of stablecoin issuer Circle and the insolvent crypto lender BlockFi regarding their ties with the recently collapsed Silicon Valley Bank (SVB).
It is believed that with this inquiry, Congress members aim to determine if these companies contributed to the bank's downfall.
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On April 9th, Warren and AOC sent letters to Circle, BlockFi, and 12 other non-crypto tech firms, asking about their relationships with SVB.
The lawmakers argue that understanding the nature of these ties is crucial for determining whether these businesses had any part in the bank's failure, particularly in light of allegations that SVB provided "white glove" treatment and "coddled" its largest depositors.
Circle CEO Jeremy Allaire and BlockFi CEO Zac Prince were asked about the duration and details of their financial connections with SVB, including deposited amounts and any agreements established between the bank and their companies.
Moreover, Warren and AOC asked if SVB offered special "perks," including low-interest rate mortgages, sponsored "ski trips, conferences and fancy dinners." In its letter, Congress members claimed:
Congress, bank regulators, and the public are owed an explanation for the bank’s hyper-reliance on tech industry firms and investors.
The lawmakers also requested information from the executives about their companies' potential roles in the $42 billion single-day run on SVB, asserting that gathering such data is crucial for understanding how SVB failed and preventing future collapses.
After the bank's failure, Circle reported having $3.3 billion locked in SVB, while BlockFi admitted to holding $227 million in uninsured deposits in the institution.
Senator Elizabeth Warren is a well-known anti-crypto advocate who even made anti-crypto plans a top priority in her re-election campaign. Before these letters, Warren urged regulators to take action against "sham" cryptocurrency audits.
