In a striking revelation, details of the biggest customers of the failed Silicon Valley Bank (SVB) were accidentally released by the Federal Deposit Insurance Corporation (FDIC) to Bloomberg News. The unprecedented disclosure provides insight into the beneficiaries of the contentious rescue operation in March, when SVB became the second-largest bank failure in U.S. history.
Among the beneficiaries were not only fledgling tech startups but also major players in the tech industry. For instance, Sequoia Capital, the acclaimed venture capital firm known for its strategic investments in tech giants like PayPal, Google, and Apple, had over $1 billion deposited in SVB, making it the bank’s fourth-largest depositor.
The report also revealed that Kanzhun, a Beijing tech firm that operates China’s largest online recruitment platform, BOSS Zhipin, had approximately $903 million deposited at SVB. Circle Internet Financial, the stablecoin firm behind USD Coin, turned out to be SVB’s biggest depositor, with a massive $3.3 billion held at the bank. Streaming platform Roku also had a substantial amount—$420 million—deposited at SVB.
The FDIC, responsible for insuring bank deposits, did not intend to release this sensitive information. Upon realizing its error, the organization reportedly requested Bloomberg to destroy and refrain from sharing the depositor list, citing the inclusion of confidential commercial or financial information.
However, this justification did not sit well with Dennis Kelleher, CEO of financial reform nonprofit Better Markets. Kelleher argued that this information, while potentially embarrassing, should not be hidden from the public, stating, “the American people have a right to know so there can be some oversight and accountability for regulators’ actions.”
The bailout of SVB was deemed necessary by U.S. officials to prevent widespread panic and to protect the broader financial system. However, the decision sparked controversy, with critics suggesting that the rescue was tantamount to a bailout favoring even foreign companies. Former Vice President Mike Pence notably criticized the move, pointing out that American taxpayers would be footing the bill to guarantee the deposits of several Chinese companies that were SVB customers.
The failure of SVB is projected to cost the FDIC’s deposit insurance fund $16.1 billion, a cost the agency plans to recover by levying fees on banks. Kelleher added that “the American people are going to pay the $16 billion bill to prevent the collapse of Silicon Valley Bank,” noting that the costs are likely to be passed on to regular customers in the form of higher banking fees and rates.