Senators want more info on Silvergate’s ‘egregious failure’ on FTX

Senators want more info on Silvergate’s ‘egregious failure’ on FTX
  • Senators criticize crypto-friendly banking firm Silvergate for not controlling customer money transfers between FTX and Alameda.

A bipartisan group of senators wants more information from Silvergate Bank. This bank serves cryptocurrency and fintech customers, on the bank’s current financial health while also asking the company about its management of FTX funds and Alameda challenges the bank in transferring customer funds from FTX to Alameda, Sens. Elizabeth Warren, D-Mass., John Kennedy, R-La., and Roger Marshall, R-Kan. wrote a letter to Alan Lane, CEO of Silvergate, accusing him of acting “in what appears to be a flagrant breach of his bank’s responsibility to monitor and report suspicious financial activity by its customers.” According to the senators, “reports indicate that Silvergate may have facilitated the transfer of client funds from FTX to Alameda. Due to that committee’s oversight of the Commodity Futures Trading Commission, Marshall, Warren, and Kennedy all sit on the Senate Banking Committee, which discusses bills to rewrite the rules governing some digital assets and cryptocurrency exchanges. Warren, Kennedy, and Marshall are also members of the Senate Agriculture Committee.

“Did you know that FTX instructed its customers to deposit money into Alameda’s account at your bank,” the senators write to Lane. The senators also want to know why Tyler Pearson, the bank’s former chief risk officer, left and whether Silvergate informed the Financial Crimes Enforcement Network of such transactions. In a public letter yesterday, Lane sought to reassure customers and investors about the bank’s sound financial condition and compliance with federal laws, claiming that she was attempting to combat “misinformation…spread by short sellers and other opportunists” in the wake of FTX’s demise. In the month since its most well-known client filed for bankruptcy, the bank’s stock has lost about half of its value.

Last week, Warren spoke about the dangers of crypto companies becoming entangled in the banking system. Since its inception, Silvergate Bank has been one of the US-based critical hubs for crypto businesses looking to access fiat bank accounts.

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