Three venture capitals comprising Paradigm, Pantera Capital, and Andreessen Horowitz (a16z) allegedly have more than $5 billion in Silicon Valley Bank (SBV).
Three Venture Capital’s $5 billion in SVB
Paradigm, Pantera Capital and Andreessen Horowitz recently announced that a portion of their capital was held in SVB. Five years of unconfirmed information from the US Securities and Exchange Commission’s (SEC) ADV filing shows that as of May 6, 2022, a16z-related funds have $2.85 billion in SBV. In addition, more than $2.5 billion of recently raised funds from Paradigm and Pantera Capital remain locked in the tech lender.
While the published report is automatically extracted from SEC filings over five years, it only provides a snapshot of the assets of VCs held in custody by the SVB at a given point in time. In short, it does not include recent updates, such as deposits or transfers made after the disclosures.
Trust Issue
The data uncovered at the time the California regulator placed SVB under FDIC receivership and the above does not show the number of funds held by the crypto funds. That is, it is not clear how much of the assets held by SVB on behalf of Paradigm, Pantera, and a16z were allocated to crypto investments.
It raised concerns about the safety of assets held by Venture Capitals in traditional financial institutions. “Currently has $3.3b worth of deposits stuck in the lender and is struggling to maintain the $1 peg,” Circle, issuer of USDC, a stablecoin tracking USD, said.
Crypto’s Regulations for Development
The crypto industry has been largely unregulated for years but it is developing. For example, many investors and businesses are turning to financial institutions like Silicon Valley Bank and Silvergate Bank to handle cash transfers and provide liquidity.
It remains to be seen how the collapse of SVB will affect the crypto industry in the long term. However, it seems likely that investors will start looking for more secure ways to store their assets, such as DeFi platforms, or may turn to crypto-focused financial institutions that offer more security and protection for their assets.
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