The cryptobank Silvergate is under investigation by the fraud unit of the United States Department of Justice for its relationship with the bankrupt exchange FTX and its affiliates.
The probe is investigating Silvergate’s hosting of accounts linked to the companies of former FTX CEO Sam Bankman-Fried, according to a Feb. 3 Bloomberg report, citing “people familiar with the matter.”
The California-based crypto bank is not charged with any wrongdoing, but Investigators are trying to find out how far the deals with FTX and Alameda went.
Silvergate was hit hard by the FTX collapse in November; reported a loss of USD 1,000 million in the last quarter. The bank laid off 40% of its staff and revealed that it borrowed billions of dollars to avoid a liquidity crisis and a bank run after the fall of the SBF empire.
Federal investigators are trying to find out if Silvergate and any other companies that work with FTX were aware of the situation.
According to Silvergate, Alameda opened an account with the bank in 2018, before the launch of FTX. Claims to have conducted due diligence and ongoing monitoring at the time, according to the report.
This week, A bank representative said the firm “has a comprehensive compliance and risk management program.”
The cryptocurrency trader Josh Rager commented on how this latest criminal investigation may affect crypto exchanges with ties to Silvergate.
The Silvergate DOJ fraud probe will probably create some fud for crypto exchanges
Funny how they always time these announcements 🙂 pic.twitter.com/7WxJYFawuF
—Rager (@Rager) February 2, 2023
Silvergate justice department fraud investigation will likely create fud for crypto exchanges. Funny how they always calculate to make these ads 🙂
On January 27, Silvergate suspended its dividend, citing “recent volatility in the digital asset industry.” It maintained that it had a “cash position in excess of its digital asset customer-related deposits” at the time.
Silvergate shares have lost 13% on the day, falling to $17.14 in after-hours trading, according to MarketWatch. Also, SI prices were currently 92% below their all-time high of $220 in November 2021.
Cointelegraph reached out to Silvergate for comment, but had not heard back at press time.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.