- Three U.S Senators have written to crypto bank Silvergate’s parent firm Silvergate Capital.
- The Senators are demanding clarity about the relationship between Silvergate and FTX.
- A similar letter was sent in December last year but the bank’s response was deemed evasive and incomplete.
Crypto bank Silvergate has once again come under fire for its questionable ties with FTX, the Bahamas-based crypto exchange that went bankrupt in November last year. United States Senators Elizabeth Warren, John Kennedy, and Roger Marshall recently penned a letter to the bank’s parent firm Silvergate Capital, seeking details about its relationship with FTX and whether it was aware of the exchange’s alleged misconduct.
The letter, addressed to Silvergate Capital’s CEO Alan Lane. highlighted the bank’s role in the improper transfer of customers’ funds from FTX to Alameda Research, the quantitative trading firm founded by Sam Bankman-Fried. The Senators also took note of the failure of Silvergate’s risk management measures.
The lawmakers took particular issue with the Federal Home Loan Bank’s $4.3 billion exposure to Silvergate. This exposure reportedly stems from a cash injection that the crypto bank received in 2022 following liquidity concerns. The Senators believe that in the event of Silvergate’s failure, the American taxpayers would be left holding the bag due to this significant exposure. “…both Congress and the public need and deserve the information necessary to understand Silvergate’s role in FTX’s fraudulent collapse.”
The conduct of Tyler Pearson, the Chief Risk Officer at Silvergate, was also called into question. The Senators demanded details of executives that were held accountable for the failures related to FTX. They are also seeking the details of any audits conducted after 2018. Silvergate has been given till 12 February to provide to the Senators’ queries. They have specifically asked for details regarding the bank’s due diligence and risk management policies. Furthermore, a monthly summary of all customer funds received from FTX has been demanded.
This wasn’t the first time when the lawmakers had demanded answers from the crypto bank. In December last year, these Senators had written a similar letter seeking clarification on the allegations leveled against FTX. However, the Senators deemed Silvergate’s response to be “evasive and incomplete”. The bank previously argued that the lawmakers were seeking “confidential supervisory information,” an argument that the Senators described as unacceptable in their latest letter.
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