Circle and BlockFi questioned on banking with SVB by Warren and AOC

Executives at stablecoin issuer Circle and bankrupt cryptocurrency lender BlockFi have been questioned by two members of Congress investigating so-called "mutual scratch deals" that allegedly took place with the now-failed Silicon Valley Bank (SVB).

April 9th, letters of the Senator Elizabeth Warren and Rep. Alexandria Ocasio-Cortez (AOC) were sent to Circle, BlockFi, and 12 other non-crypto tech firms asking a series of questions about each firm's relationship with SVB.

Lawmakers said more about SVB's "coddling" and "white glove" treatment of its largest depositors is needed to understand whether these companies played a role in SVB's collapse.

Jeremy Allaire and Zac Prince, the respective CEOs of Circle and BlockFi, were questioned about the length of their financial relationships with SVB, the amounts deposited in the bank, and what "deals" were made between their companies.

In addition, the couple wanted to know if SVB offered "advantages" such as low-interest mortgages or SVB-sponsored "ski trips, conferences and fancy dinners."

“An explanation is owed to Congress, banking regulators, and the public for the bank's hyperreliance on tech industry firms and investors,” Warren and AOC wrote.

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They added that the number of SVB depositors in the technology industry resulted in "an abnormally high percentage of deposits" not insured by the Federal Deposit Insurance Corporation (FDIC) and questioned executives about "the role that companies like Theirs could have played into precipitating $42 billion in a single day at SVB."

“Getting insight into these factors is important to understanding how SVB failed and how to prevent the next failure,” they added.

Warren and AOC said they think it may explain why some clients, like Circle, placed extremely large amounts of uninsured deposits with SVB.

Shortly after the collapse of SVB, Circle revealed that they had $3.3 billion tied up in SVB. While BlockFi was found to have $227 million in uninsured deposits with the bank

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