Silvergate Bank is a firm that specializes in working with crypto and fintech companies, and a group of senators from both parties have asked for additional information regarding the bank’s current financial soundness while also criticizing the corporation for its handling of the FTX and Alameda money.
In a letter to Alan Lane, CEO of Silvergate, Senators Elizabeth Warren (D-Mass. ), John Kennedy (R-La. ), and Roger Marshall (R-Kan.) said the bank’s involvement in the transfer of FTX customer funds to Alameda revealed what appears to be an egregious failure of the bank’s responsibility to monitor for and report suspicious financial activity carried out by its clients. There are “reports suggesting that Silvergate enabled the transfer of FTX client monies to Alameda,” according to the senators’ group.
As the Senate Agriculture Committee has jurisdiction over the Commodity Futures Trading Commission, it is currently debating legislation to reform regulations on some digital assets and crypto exchanges, and Senators Warren and Kennedy both serve on the Senate Banking Committee. Senator Marshall serves on the Senate Agriculture Committee.
The senators write to Lane, “Were you aware that FTX was directing its clients to wire money to Alameda’s account with your bank?” The senators also want to know why former Chief Risk Officer Tyler Pearson departed the bank and if Silvergate reported such transactions to the Financial Crimes Enforcement Network.
After the FTX collapse, Lane wrote a public letter yesterday to reassure investors and customers of the bank’s financial health and compliance with federal rules, stating he wanted to battle the “misinformation… disseminated by short sellers and other opportunists.” Stock in the bank has dropped by half since the business’s most high-profile client went bankrupt a month ago.
Warren warned last week that cryptocurrency companies should avoid forming partnerships with traditional financial institutions. Silvergate Bank, established in 2016, is one of the most important hubs in the United States allowing cryptocurrency businesses to open bank accounts in fiat currency.
