Silvergate and Silicon Valley Bank
It’s been a crazy week. I won’t opine on what happened with Silvergate and Silicon Valley Bank in this email. Will discuss this further in coming days.
This is a quick note to reassure you that we at Layer2 have had zero loss of client or corporate funds as a result of these two events. In fact, we engineered our platform from the ground up to be multi-partner, to mitigate these types of risks.
- Silvergate –
- We did NOT have any corporate funds held at Silvergate. However, Silvergate was the settlement bank for one of our liquidity/exchange partners.
- We, along with our exchange partner, proactively halted trading on the first sign of trouble, immediately settled open trades and wired out ALL in transit client funds from Silvergate.
- Silicon Valley Bank –
- We are fortunate that we did NOT have any corporate or client funds held at Silicon Valley Bank, either directly or via partners.
- Many of our friends, partners, clients however have been severely impacted and we will do what we can to assist them in any way we can.
- Once this crisis passes, there is a broader discussion to be had around how to spread assets between various deposit accounts, and deposit/treasury accounts.
What are we doing to help our clients mitigate these types of risks?
- Multi-partner – Layer2’s Banking/Payment as a Service platform was engineered from the ground up to be multi-partner, all accessible via a Single API, which means:
- multi-custodial – 2 qualified crypto custodians (1 OCC bank, 1 Trust)
- multi-exchange – 5+ crypto, fx exchanges/ liquidity partners
- multi-bank – 4 fiat banks, trusts for fiat deposit, treasury, payment products
- Safe, qualified custody – While we are a Money Transmitter in some jurisdictions, we strongly believe that Money Transmitters should use qualified custodians.
- Qualified custody – All client digital assets are always kept safely with multiple qualified custodial trusts.
- Full transparency, control – Clients have full transparency, and control of their assets. Funds are never used to lend out to counterparties, unless you choose to lend it to a licensed lending facility.
- No co-mingling – We (Layer2 + our partners) will never co-mingle corporate funds with clients funds.
- Fiat Treasury Accounts – We are launching treasury accounts in the US very shortly. Assets are backed by US Treasury Bills (fully transparent) and kept off balance sheet, safely at a trust. More to come on this new feature.
If you have any questions, or concerns, please reach out to us via your dedicated slack channels or firstname.lastname@example.org.