Crypto Bank Silvergate Slides Further After Letter from US Sen. Warren
"New and disturbing allegations about the [Silvergate's] business practices have continued to surface," says the letter from the Massachusetts Democrat and two Republican colleagues.
Senators Elizabeth Warren (D-Mass.), John Kennedy (R-La.) and Roger Marshall (R-Kan.), in a letter late Monday evening, asked crypto-friendly bank Silvergate (SI) for answers over its supposed role in facilitating transfers between bankrupt exchange FTX and its sister firm, Alameda Research
Following FTX's bankruptcy filing, allegations have been made that former CEO Sam Bankman-Fried made large transfers of customer funds from the exchange to trading firm Alameda Research, which he also owned. The senators' letter comes at a time when the investment community is suspicious about what role Silvergate may have played in this activity.
FTX and the related entities in Bankman-Fried's crypto empire held around 20 different accounts at Silvergate, according to a bankruptcy filing.
"[There are] 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," said the letter. "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 shares are adding to their roughly 50% decline since the FTX collapse, down another 6.15% and touching a new 52-week low in Tuesday morning trade.
Silvergate issued the following statement, reported NBC: "Like many others, Silvergate was the victim of FTX’s and Alameda Research’s apparent misuse of customer assets and other lapses of judgment and we believe our full cooperation will help set the record straight about our role in the digital asset ecosystem." The bank has until Dec. 19 to officially respond to the senators.
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