Roblox Is Being Handed $150 Million By Government After Bank Collapse, Money Isn't Real
A classic bank run caused Silicon Valley Bank to become the second-largest bank collapse in history. Now the Federal Reserve is promising a bailout for all of its customers, which includes everyone from small startups to major tech industry players. Roblox, the social media platform where millions of kids play potato versions of blockbuster video games, is one of them.
Silicon Valley Bank had roughly $209 billion in assets on its balance sheet last week when panicky venture capitalists tried to pull out their money en masse after worries the firm had become insolvent. Roughly $150 million of that belonged to Roblox, something the company revealed in an SEC filing late Friday after SVB was shut down by the Federal Deposit Insurance Corporation.
“Of Roblox Corporation’s (the “Company”) $3 billion of cash and securities balance as of February 28, 2023, approximately 5% is held at Silicon Valley Bank,” it wrote. “Thus, regardless of the ultimate outcome and the timing, this situation will have no impact on the day to day operations of the Company.”
At the time, it seemed like everyone who gave SVB its money was never going to see it again. Normally, bank deposits are only insured up to $250,000. On Sunday, however, the Federal Reserve and FDIC invoked a systemic risk exception to bail out the roughly $175.4 billion in customer deposits. $150 million may have been couch cushion change to Roblox, which made $2.2 billion last year off of its crowdsourced metaverse (which allegedly includes the work of some children).
Treasury Secretary Janey Yellen and others insisted it wasn’t a bailout because SVB’s executives and investors were still getting zero-ed out, but it’s not nearly that simple. Even aside from making risky bets on certain long-term securities and lobbying Washintong for less regulation, SVB, as its name implies, held a unique position in the tech world.
The “schmoozing and vibes bank” was a revolving door of venture capital and crypto-friendly to boot, and it also required startups who it helped secure loans for to use it exclusively for their banking needs. Fast-forward to the weekend when people started appearing out of the woodwork online to beg for a bailout, even when in some cases they were responsible for creating the run on the bank in the first place, and were even trying to profit off of it in the interim.
All of which is to say that SVB was as far from It’s A Wonderful Life’s Savings and Loan as you could get. And in the act of bailing it out, the Federal Reserve has now committed to also giving loans to any other banks who are seeing short-term losses on investments following recent interest rate hikes. In plain English what this means is a preemptive promise to bail out other banks that might have screwed up. It’s all in the name of shoring up the financial system, even as things like credit card debt spike and student loan forgiveness stalls in the Supreme Court.
At least Roblox will get its money.
More from Kotaku
Sign up for Kotaku's Newsletter. For the latest news, Facebook, Twitter and Instagram.