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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. 

  1. Silvergate –
    1. We did NOT have any corporate funds held at Silvergate. However, Silvergate was the settlement bank for one  of our liquidity/exchange partners.
    2. 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.
  2. Silicon Valley Bank –
    1. We are fortunate that we did NOT have any corporate or client funds held at Silicon Valley Bank, either directly or via partners.
    2. 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.
    3. 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?

  1. 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
  2. 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. 
  3. 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

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Silvergate and SVB
by Anthony Lynch
March 12, 2023
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