BlockTower Capital's crypto funds in jeopardy as Signature Bank, Silvergate Bank CollapseFour crypto asset management funds managed by BlockTower Capital were using Signature Bank, Silvergate Bank – and in some cases, both—as custodians for their assets, according to the most recent filing with the Securities and Exchange Commission. These funds had a gross asset value of approximately $940 million.
On March 8, Silvergate Bank— a crypto-friendly institution—announced it would voluntarily liquidate its assets and wind down operations amid questions from auditors surrounding its financial figures. Two days later, California regulators shut down Silicon Valley Bank, another venture capital and tech-favored bank, due to insolvency concerns. Finally, on March 12, New York-based Signature Bank – which had been limiting its industry exposure since last year – was closed by state regulators to protect depositors.
According to the May 11, 2022 Form ADV Filing, BlockTower Blue Signum SPV Fund had a gross asset value of approximately $4.6 million and used Silvergate Bank as its sole custodian. Similarly, BlockTower DeFi SPV I Fund ($74.6 million in gross assets) and BlockTower Gamma Point Master Fund ($89 million) listed Silvergate and Signature Bank, respectively, as their custodians.
BlockTower Capital Partners Master Fund reported $770.5 million in gross assets and had a diverse custodial portfolio featuring five custodians: Silvergate, Signature Bank, the trust services of Anchorage Digital, and Coinbase, as well as Celadon Financial Group. However, the filing date indicates that BlockTower Capital could have changed its custodian selection since then.
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