FTX And Alameda Dealings Are The Subject Of DOJ Investigation Into Silvergate

Key Points:

• US Department of Justice’s fraud unit is looking into the cryptocurrency bank Silvergate because of its connections to the insolvent FTX exchange and its affiliates.
• Silvergate and any other businesses affiliated with FTX were aware of the circumstance is what the federal investigators are attempting to ascertain.
• Silvergate stopped paying dividends on January 27 due to “recent volatility in the digital asset industry.” According to the company, at the time, it had a “cash position in excess of its digital asset customer-related deposits.”

According to reports, the US Department of Justice’s fraud unit is looking into the cryptocurrency bank Silvergate because of its connections to the insolvent FTX exchange and its affiliates.

According to a Feb. 3 report by Bloomberg, which cited “people familiar with the matter,” the investigation focuses on Silvergate’s hosting of accounts connected to the businesses of former FTX CEO Sam Bankman-Fried.

The crypto bank, which is based in California, is not charged with any crimes, but investigators are trying to determine how far the interactions with FTX and Alameda went.

The collapse of FTX in November had a significant negative impact on Silvergate, which posted a $1 billion loss for the third quarter. In order to avoid a liquidity crisis and bank run after the collapse of the SBF empire, the bank announced that it had laid off 40% of its workforce and disclosed taking out billions of dollars in loans.

If Silvergate and any other businesses affiliated with FTX were aware of the circumstance is what the federal investigators are attempting to ascertain.

Alameda created a bank account in 2018, prior to the start of FTX

According to the report, it asserts to have carried out ongoing monitoring and due diligence at the time.

A bank representative stated this week that the company “has an extensive compliance and risk management program.”

Josh Rager, a crypto trader, made a comment about how this most recent criminal probe would affect crypto exchanges connected to Silvergate.

Silvergate stopped paying dividends on January 27 due to “recent volatility in the digital asset industry.” According to the company, at the time, it had a “cash position in excess of its digital asset customer-related deposits.”

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