Etsy freezes transactions after Silicon Valley Bank closure, squeezing sellers nationwide
Silicon Valley Bank customers line up outside California location
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 transaction freeze.
“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?”
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.
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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.
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.
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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.
|SIVB||SVB FINANCIAL GROUP||106.04||-161.79||-60.41%|
|JPM||JPMORGAN CHASE & CO.||133.65||+3.35||+2.57%|
|COF||CAPITAL ONE FINANCIAL CORP.||98.20||-2.78||-2.75%|
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.”
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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.”
“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.
“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.”
Etsy did not respond to a FOX Business request for comment by time of publication.