Crypto Bank Silvergate Asked by US Senators to Explain FTX Ties (Where Were The Regulators??)

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Always behind the curve, US Senators (Warren, Marshall, Kennedy) want to get to the bottom of Silvergate’s decline and its relationship with Sam Bankman-Fried and FTX. This reminds me of the 2008 financial crisis when The Federal Reserve claimed they never saw it coming. Despite the data.

But back to crypto bank Silvergate.

Crypto bank Silvergate Capital Corp. was asked by three US Senators to release all records about transfers of funds for the collapsed FTX empire of Sam Bankman-Fried. 

“Your bank’s involvement in the transfer of FTX customer funds to Alameda reveals what appears to be an egregious failure of your bank’s responsibility to monitor for and report suspicious financial activity carried out by its clients,” Senators Elizabeth Warren, Roger Marshall and John Kennedy wrote in a letter released Tuesday. “The public is owed a full accounting of the financial activities that may have led to the loss of billions in customer assets, and any role that Silvergate may have played in these losses.”

Shares of the La Jolla, California-based bank fell as much as 8%. The slide extends Silvergate’s losses on the year to more than 84% and has it trading at a fresh 52-week low. Not surprisingly, Silvergates’ stock price is closely linked to cryptocurrency Bitcoin.

The letter cite concerns about the banking services that Silvergate provided to both FTX as well as Bankman-Fried’s trading firm, Alameda Research. It says the arrangement between FTX and Alameda depended on Silvergate’s depository services and puts the bank “at the center of the improper transmission of FTX customer funds.”

“Silvergate’s failure to take adequate notice of this scheme suggests that it may have failed to implement or maintain an effective anti-money laundering program, as required under the Bank Secrecy Act,” the Senators said.

Perhaps Silvergate should be renamed Silverfish. But seriously, no US Senator or DC regulator saw the following chart?? Bitcoin and other cryptos have been clobbered in 2022 as The Fed tightens monetary policy to combat inflation.

Here is our regulator, SEC’s Gary Genslar, keeping an eye on cryto exchanges like FTX.

Maybe US Senators and DC regulators thought Silvergate is a silverfish.

Published by confoundedinterest17

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