Senator Warren and Rep. AOC Investigate Silicon Valley Bank’s “White Glove” Treatment of Crypto Firms – Regulation Incoming?

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Fredrik Vold

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October 23, 2023 07:12 EDT

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US Senator and well-known crypto-critic Elizabeth Warren has joined hands with Congresswoman Alexandria Ocasio-Cortez in asking for more details about Silicon Valley Bank’s (SVB) dealings with crypto companies.

The two politicians said in letters sent to some of SVB’s largest clients that they would like to get more information about how long the companies had been invested in the bank, and how much money they had deposited.

The letters further asked about the relationships between executives at the companies and SVB’s top leadership, including questions about whether the bank had offered perks such as special low-interest loans.

Other questions in the letters focused on whether there were agreements in place that required the companies to maintain deposits at SVB.

Senator Warren elaborated on her reason for sending the letters in a tweet on Tuesday, calling it “reckless” that tech firms kept more than $13 billion in uninsured deposits at SVB:

The 10 largest Silicon Valley Bank accounts had more than $13 billion in uninsured deposits—a reckless move by tech firms & the bank. @RepAOC and I are pressing SVB's depositors for information on possible insider treatment and coddling of SVB account holders before it failed. https://t.co/IIwOlWYVqk

— Elizabeth Warren (@SenWarren) April 11, 2023

“Mutual backscratching dynamic”

Judging from the letters, Warren and Ocasio-Cortez have taken a particular interest in what they called a “mutual backscratching dynamic” between the bank and venture capital firms.

Central to the questions were allegations by the two lawmakers that large depositors were rewarded with so-called “white glove” services, including “industry ski trips, conferences and fancy dinners.”

This “could help explain why some customers placed massive, uninsured deposits at SVB,” the two Democrats wrote.

In all, executives at 14 companies from different industries received letters from Senator Warren and Representative Ocasio-Cortez, including Circle CEO Jeremy Allaire, BlockFi founder Zac Prince.

Long history of attacking crypto

Elizabeth Warren has long been critical of crypto, and has shown a particular hostility towards Bitcoin mining and crypto’s energy usage.

Warren has also claimed that “rogue nations” use crypto to “evade sanctions and finance terrorism.”

Alexandria Ocasio-Cortez, better known by her initials AOC, has been less outspoken than Warren in her criticism of crypto but has in the past signed on to a letter that attacked proof-of-work and praised proof-of-stake as a more energy-efficient consensus mechanism.