• Several U.S. senators are seeking new details from Silvergate Capital about its knowledge of FTX’s wrongdoing.
• The group of senators asked Silvergate to disclose whether it was aware that FTX instructed users to wire funds to Alameda’s account at Silvergate and whether it flagged any suspicious transactions. They also asked about due diligence and external reviews/audits.
• Silvergate has until Feb 13 to respond, but there is no known consequence for failure to do so.
Senators Seek New Details on Silvergate Ties to FTX
Several U.S. Senators, including noted cryptocurrency critic Elizabeth Warren (D-Mass.) as well as Roger Marshall (R-Kan.) and John Kennedy (R-La.), are seeking new details from Silvergate Capital about its knowledge of FTX’s wrongdoing, according to a Jan. 31 report from Bloomberg.
Questions Asked About FTX Instructed Users
The group of senators asked Silvergate to disclose whether it was aware that FTX instructed users to wire funds to Alameda’s account at Silvergate — an instance of fund mismanagement that was first reported last November — and whether it flagged any suspicious transactions. Furthermore, they asked about the due diligence process and the results of external reviews and audits conducted by the company.
Silvergate Obtained $4 Billion Loan After Collapse
The same senators noted that following the collapse in late 2022, Silvergate obtained a $4 billion loan from the Federal Home Loan Bank — a government sponsored banking system — which they used as a lender of last resort. The group of senators asked how this loan will be used by them in the future.
December Letter Revealed Relationship Predated Founding
The letter follows another one sent in December, where although citing confidentiality rules, revealed that their relationship with Alameda Research predated FTX’s founding and were reviewing transactions related to both firms while also conducting due diligence on their clients—a statement made public earlier that month too.
Silvergate Has Until Feb 13 To Respond
Silveragate has until Feb 13th 2021 to respond fully or face unknown consequences; however they have not provided any further information on what those consequences may be if they fail to do so before then