Etsy freezes some transactions after Silicon Valley Bank closure, squeezing sellers nationwide
Etsy joins Circle, Compass Coffee and Camp on the growing list of impacted companies
Silicon Valley Bank customers line up outside California location
Silicon Valley Bank customers were seen outside a Menlo Park, California location, Friday, after the Federal Deposit Insurance Corporation seized its assets. (Cointelegraph)
The collapse of start-up backer Silicon Valley Bank this week continues to cause ripples across the tech industry, with Etsy the latest company to voice concerns after announcing a freeze on some transactions.
"I noticed today my money that was supposed to be deposited to be available tomorrow was never sent to my checking account," one Etsy seller said in a video posted to TikTok on the handle amgeee1. "Then I get an email saying because of the Silicon Valley Bank they can’t issue my deposit."
"My money, that I worked hard for, they can't send to my bank account," she continued, revealing she cannot pay her mortgage as a result of the transaction freeze. "The money I was expecting to have in my bank account tomorrow they can't send to me. So why is that my problem?"
An Etsy spokesperson insisted that a fraction of its sellers saw payments temporarily delayed on Friday but said those transactions were being paid as of Monday.
SILICON VALLEY BANK COLLAPSE: MARK CUBAN SAYS FED SHOULD ‘IMMEDIATELY’ TAKE THIS ACTION
"This issue has impacted an extremely small group of sellers," the spokesperson told Fox News Digital. "Approximately 0.5% of our active seller base had their payments delayed on Friday. We are working to pay these sellers today and we've already started processing payments via another partner this morning."
The Federal Deposit Insurance Corporation (FDIC) announced Friday that it would close SVB, until then the 16th-largest bank in the U.S., marking the worst U.S. financial institution failure since the Great Recession.
The bank held a reputation as a go-to for a number of Silicon Valley industries and startups. Y Combinator, an incubator startup that launched Airbnb, DoorDash and DropBox, regularly referred entrepreneurs to them.
SVB's collapse was so quick that, hours before its closure, some industry analysts were hopeful that the bank was still a good investment. The bank’s shares had fallen 60% on Friday morning after a similar drop the day before.
BRAZIL - 2021/07/12: In this photo illustration the Etsy logo seen displayed on a smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images / Getty Images)
Anxious depositors rushed to withdraw their money over concern for the bank’s health, causing its collapse, which may serve as "an extinction-level event for startups," according to Y Combinator CEO Garry Tan.
Etsy has joined the ranks of companies impacted by the closure, which already include crypto firm Circle, kids retailer Camp and coffee company Compass Coffee. The companies themselves might not have been impacted in each case: Compass Coffee’s troubles trickled down from its payroll provider, who was "severely impacted" by the bank’s closure.
Etsy reached out to sellers on Friday to let them know that their payments were frozen because they relied on the bank for some of its accounts, saying only that there would be "a delay" with deposits.
"We are working with our other payment partners to issue your deposit as soon as possible," Etsy said. The total number of affected sellers remains unknown, but those who have been impacted have taken to social media to tell their stories.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SIVB | NO DATA AVAILABLE | - | - | - |
| JPM | JPMORGAN CHASE & CO. | 244.76 | +3.98 | +1.65% |
| MS | MORGAN STANLEY | 134.99 | +3.30 | +2.51% |
| COF | CAPITAL ONE FINANCIAL CORP. | 182.64 | +1.95 | +1.08% |
Another "mompreneur" by the name of Amber said she was "freaking out" over the news, according to The Daily Mail.
"I’m a mom of three, I run a small business, I do this from my home," Amber said, referring to her company Little Miss Lovely Creations. "Those funds feed my family and pay my bills."
Amanda Nielsen, who runs the shop Flower and Earth mostly through Etsy, said that she’s still getting orders and can’t say when she will be able to fulfill them.
"It’s the worst time to get that kind of email because you can’t do anything for two days," she told the Mail. "You feel helpless."
A customer stands outside of a shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California. Silicon Valley Bank was shut down on Friday morning by California regulators and was put in control of the U.S. Federal Depo (Justin Sullivan/Getty Images / Getty Images)
"Pretty much all of my sales are through Etsy. I have another site but I had been thinking of deleting it because pretty much everything comes through Etsy," she said.
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"If this doesn't get resolved soon I will have to shut down by Etsy account because I just can't afford to take the risk of processing orders without knowing when I'll be paid."