This past Mondy, Silvergate (NYSE:SI) CEO Alan Lane took the extraordinary measure of posting a public letter defending his bank’s handling of the accounts of now bankrupt FTX and affiliated hedge fund Alameda Research. Silvergate is a regulated bank that has been a leader in working with digital asset firms providing key banking services. Lane stated that they had conducted “extensive due diligence” on both FTX and Alameda before allowing them to utilize Silvergate’s services. At the same time, he sought to assure customers that the bank remains sound.
Yesterday (Tuesday), several US Senators sent a letter to Lane demanding answers to multiple questions about the bank’s relationship with FTX/Alameda.
Signed by Senators Elizabeth Warren, John Kennedy, and Roger Marshall, the letter cited allegations suggesting that “Silvergate facilitated the transfer of FTX customer funds to Alameda.”
The Senators state:
“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. 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.”
The letter then demands answers to multiple questions, including:
- Were you aware that FTX was directing its customers to wire money to Alameda’s account with your bank?
- Did Silvergate flag as suspicious the movement of funds to Alameda accounts or between Alameda accounts and FTX or FTX-affiliate accounts?
- Were you aware that Alameda Research LLC was a distinct company from FTX and its subsidiaries?
- Has Silvergate ever undergone an independent audit of its BSA/anti-money laundering (AML) compliance program?
- Did Silvergate have any communications with representatives from Alameda, FTX, or FTX-affiliated entities regarding concerns about the transfer of funds into Silvergate?
- and more…
The elected officials demand answers by December 19, 2022.
The letter is available below.
2022.12.05 Letter to Silvergate Bank re FTX