Bank / Credit Union

Senators target Silvergate following FTX collapse

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December 6, 2022

Senator Elizabeth Warren, a Democratic from Massachusetts, along with Republican Sens. John Kennedy of Louisiana and Roger Marshall of Kansas, have sent a request for information to Silvergate Bank regarding its relationship with FTX and Sam Bankman-Fried, according to a NBC News report.

Silvergate Bank, based in La Jolla, California, is known for its close relationship with Bankman-Fried, the founder of cryptocurrency exchange FTX. The exchange's collapse has resuled in the loss of billions of dollars.

"In the weeks since FTX's shocking collapse, new and disturbing allegations about the company's business practices have continued to surface," the letter from the Senate banking committee said. "Including the reports that Mr. Bankman-Fried 'secretly transferred some $10 billion of customer funds to his trading vehicle, Alameda Research,' to fund 'risky bets,' violating both U.S. securities laws and FTX's own terms of service. We are concerned about Silvergate's role in these activities because of reports suggesting that Silvergate facilitated the transfer of FTX customer funds to Alameda."

Silvergate allows its customers to transfer fiat currency into cryptocurrency exchanges and FTX in particular held 20 accounts at the bank. The bank facilitated billions of dollars in wire transfers to FTX Group.

The bank previously had a testimonial from Bankman-Friend on its website which stated, "Life as a crypto firm can be divided up into before Silvergate and after Silvergate. It's hard to overstate how much it revolutionized banking for blockchain companies." Following FTX's collapse, the bank removed the testimonial.

"Silvergate appears to be at the center of the improper transfer of billions in FTX customer funds. Americans need answers. Those guilty of wrongdoing must be held accountable," Sen. Warren said in a statement.

Silvergate, for its part, has pledged to be transparent with Warren.