An employee walks past a quilt displaying Etsy Inc. signage at the company’s Brooklyn headquarters.
Victor J. Blue/Bloomberg via Getty Images
Etsy warns sellers that the Silicon Valley Bank collapse Friday is causing delays in processing payments, according to an email from the company shared with NBC News.
The online DIY megastore said it was using SVB to facilitate disbursement to certain sellers and was working with other payment partners to issue deposits.
“We wanted to let you know that there is a delay with your drop off which was scheduled for today,” the email from Etsy said.
“We know you rely on us to help run your business and we understand how important it is for you to receive your funds when you need them,” the email continued. “Please know that our teams are working hard to resolve this issue and get your funds to you as quickly as possible.”
Etsy did not immediately respond to a request for comment.
Etsy claims 7.5 million sellers worldwide. Regulators placed SVB in receivership around noon Friday to end a bank run on the tech lender that began on Wednesday after it said it was seeking to raise more than $2 billion.
A concerned Etsy seller told NBC News that delaying deposits would have a “catastrophic” effect on his business.
Owen McKinney, who runs the Kentucky Country Home laser engraving business, said in an email that he relies on deposits to pay for things like shipping and materials. He said he had already contacted one of his suppliers to delay an order of materials he needed for next week.
“At this time, Etsy has not provided a time frame for depositing funds,” McKinney said. “Although I have a website, Etsy is still a big part of my business.”
The drama with SVB began earlier this week when the bank revealed that it sold approximately $21 billion worth of securities and offered to offer over $1 billion in stock, all to raise funds for “general corporate purposes.”
The move raised eyebrows among investors who wondered why SVB would need to raise so much money abruptly. It also worried depositors, many of whom suddenly wondered if their money was safe and started withdrawing funds.
On Friday, the California Department of Financial Protection and Innovation said it was takeover and closure of SVB to protect deposits, appointing the Federal Deposit Insurance Corporation as receiver. The FDIC has formed a separate entity where all insured SVB deposits — up to $250,000 per depositor — will be available by Monday morning.
The shutdown came after a tumultuous morning for SVB, in which trading in its shares was halted after falling double digits before markets opened. The drop followed a drop of more than 60% on Thursday.
The shutdown marks the largest bank failure since the 2008 financial crisis and the second largest in US history after Washington Mutual collapsed during this industry-wide collapse, according to FDIC data.