Etsy has sent an email to several shop owners about payout delays due to the sudden collapse of Silicon Valley bank, according to The Verge.
(Photo : Paul Zimmerman/Getty Images for NASDAQ)
NEW YORK, NY - APRIL 16: (L-R) CEO Nasdaq Bob Greifeld, Kristina Salen, Etsy's CFO ,Chad Dickerson, Chairman and CEO of Etsy along with Etsy Sellers ring the Nasdaq Opening Bell in Celebration of IPO at Nasdaq on April 16, 2015 in New York City.
The email contains an explanation to impacted sellers, stating that the platform uses Silicon Valley bank to send out deposits to some of the sellers. It explains that the sellers may not be able to get their scheduled payments.
An Etsy spokesperson said that the company is working to fulfill deposits using other payment partners and they will begin resuming some payments on March 13th.
The email was sent out the same day the Federal Deposit Insurance Corporation (FDIC) and California regulators shut down Silicon Valley Bank.
The auction for the bank's assets was done on Sunday afternoon, and if no buyer emerges, the FDIC will be forced to sell its assets to reimburse its depositors.
The number of sellers impacted by the payout delays is unclear and there is also the possibility that not everyone affected has been notified yet. Additionally, Etsy sellers have payment options to choose from-such as daily, weekly, bi-weekly or monthly payments. It seems that those payments scheduled for last Friday have been the only ones that got notified.
However, this leaves other Etsy sellers who have payments set up in the coming days or weeks anxiously waiting to hear from the online marketplace.
Etsy hasn't provided any additional information about the potential impact of the bank's collapse on sellers and this is bringing in a lot of confusion and frustration to shop owners.
Also Read: Etsy Sellers, Customers Plan to Boycott the Platform Over 30% Increase in the Transaction Fees
The Silicon Valley Bank Drama
Last week, the bank disclosed that it sold around $21 billion of securities and proposed to offer over $1 billion in shares for general corporate purposes.
The move didn't sit well with investors and found it strange why the bank needed to raise that amount of money right away. This also worried depositors who wonders whether their money was safe and started pulling their money out of the bank.
Following the announcement, the California Department of Financial Protection and Innovation said that it will take over and close the bank to protect deposits, naming FDIC as its receiver. The FDIC then formed a separate entity where all insured deposits will be available by Monday morning.
The closure of the bank is also the biggest bank failure since the 2008 financial crisis. It is also the second-largest in US history after the collapse of Washington Mutual.
It is unclear if any other customers of Silicon Valley Bank have experienced the same type of payment delays that Etsy has. It is important to note that some of the companies reported on social media to have been clients of SVB do not actually bank with SVB anymore. For example, Airbnb is no longer a customer of SVB, as their CEO stated on Twitter.
Related Article: Silicon Valley Bank's Remaining Assets Auctioned; Possible Buyers Emerge
