Silvergate’s ties to FTX face renewed scrutiny from senators

Multiple U.S. Senators are seeking new details from Silvergate Capital about their knowledge of FTX fraud. January 31st Report from Bloomberg.

Senators in charge of the investigation include prominent crypto commentators Elizabeth Warren (D-Massachusetts), Roger Marshall (R-Kansas) and John Kennedy (R-RA).

The senator alleged that Silvergate did not adequately answer earlier questions, and that confidentiality concerns were “unacceptable” as a reason for the bank’s failure to disclose the information, according to a letter obtained by Bloomberg. They added that Congress and the public have an obligation to be informed about Silvergate’s role in the collapse of FTX.

The group of senators also asked Silvergate to disclose whether FTX was aware that it instructed users to transfer funds to Silvergate’s Alameda account – an error in the originally reported funds. management example last NovemberThe senator also asked Silvergate whether it flagged suspicious transactions. Additionally, they asked his Silvergate about its due diligence process and the results of external reviews and audits.

Elsewhere in the letter, the senators noted that Silvergate received a $4.3 billion loan from the Federal Home Loan Bank (a government-backed banking system) after the collapse of FTX in late 2022. added that Silvergate relied on banks as lenders of last resort.. A group of senators asked Silvergate how it plans to use its loans.

The same senator had previously sought a response from Silvergate in a similar letter in December. Silvergate, citing confidentiality rules at the time, clarified that his relationship with Alameda Research predates his founding of FTX. It also said it was considering a transaction involving the two companies. The bank repeated a statement made public earlier that month, adding that it was conducting due diligence on its customers.

Silvergate has until February 13th to answer an updated set of questions. A Bloomberg report suggests the senators may go through banking regulators to get the requested information, but it’s unclear what action will be taken in the event of no response. am.