An employee walks through a quilt displaying Etsy Inc. signage. at the company’s headquarters in Brooklyn.
Victor J. Blue/Bloomberg via Getty Images
Etsy is warning sellers that the collapse of Silicon Valley Bank on Friday caused delays in payment processing, according to an email from the company shared with NBC News.
The do-it-yourself online mega store said it used SVB to facilitate disbursements for some sellers, and that it worked with other payment partners to issue deposits.
“We wanted to let you know that there is a delay with the deposit that was scheduled for today,” the email from Etsy said.
“We know that you rely on us to help you run your business and we understand how important it is that you receive funding when you need it,” the email continued. “Please know that our team is working hard to resolve this issue and deliver your funds as soon as possible.”
Etsy did not immediately respond to a request for comment.
Etsy claims 7.5 million sellers worldwide. Regulators placed SVB into receivership around noon on Friday to end a bank run on the tech lender that had begun Wednesday after it said it was seeking to raise more than $2 billion.
One affected Etsy seller told NBC News that the deposit delay would have a “catastrophic” effect on her business.
Owen McKinney, who runs a Kentucky Country Home laser engraving business, said in an email that he relies on deposits to pay for items like shipping costs and materials. He said he had contacted one of his suppliers to postpone the order of the necessary materials for next week.
“At this time, Etsy has not provided a timeline for depositing funds,” McKinney said. “While I have a website, Etsy remains a big part of my business.”
The drama with SVB started earlier this week when the bank announced that it was selling about $21 billion in securities and proposing a stock offering of more than $1 billion, all to raise funds for “general corporate purposes.”
The move raised eyebrows among investors who wondered why SVB needed to raise money so quickly. Also worrying the depositors, many of them suddenly wondered if their money was safe and started withdrawing their funds.
On Friday, the California Department of Financial Protection and Innovation said it was taking over and shutting down SVB to protect deposits, naming 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 on Monday morning.
The closing followed a tumultuous morning for SVB, when the shares halted trading after falling twice before the market opened. The drop comes on the back of a more than 60% drop on Thursday.
The closure marks the largest bank failure since the 2008 financial crisis and the second largest in US history after Washington Mutual collapsed during the industry crisis, according to FDIC data.