• The United States Department of Justice has launched a probe into Silvergate Capital Corp. and its dealings with bankrupt crypto firm FTX and its sister concern Alameda Research.
• The DoJ is now looking into the operations of Silvergate Captial Corp., the parent company of the fintech and crypto-focused Silvergate Bank, which was one of the chief backers of FTX.
• Federal prosecutors in the DoJ’s fraud section are conducting a criminal probe into the bank’s dealings, especially those with FTX and Alameda Research, as it had been hosting several accounts tied to businesses associated with FTX founder Sam Bankman-Fried.
DoJ Probes Silvergate Capital Corp.
The United States Department of Justice has launched a probe into Silvergate Capital Corp. and its dealings with bankrupt crypto firm FTX and its sister concern Alameda Research.
Silvergate Bank Investigated
The DoJ is now looking into the operations of Silvergate Captial Corp., the parent company of the fintech and crypto-focused Silvergate Bank, which was one of the chief backers of FTX. This resulted in a net loss of $1 billion for the bank in the fourth and final quarter of 2022 after over two thirds customer withdrew deposits worth $8 billion after FTX collapsed.
Criminal Probe Launched
Federal prosecutors in the DoJ’s fraud section are conducting a criminal probe into the bank’s dealings, especially those with FTX and Alameda Research, as it had been hosting several accounts tied to businesses associated with FTX founder Sam Bankman-Fried. This has incited increased scrutiny from government bodies like US senators requesting details about risk management practices related to these companies.
Silvergate’s Struggles
Silvergate used to be a small US organization till it went public in November 2019; soon it entered the crypto market becoming an important feature as a bank for companies that were rejected by traditional banking service providers. Its shares reached an all time high before plummeting 88% due to FUD among investors because increasing judicial scrutiny weighed down performance creating panic selling resulting in layoffs being implemented to mitigate damages incurred by it.
Could Charges Be Brought?
Although no charges have been brought against Silvergate yet, that eventuality is possible given current anti-crypto sentiments among most U.S government departments such as DOJ fraud section conducting further investigations on its connections to business associated with Sam Bankman-Fried