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US Senators Seek Clarification From Silvergate in FTX Matter

Three members of the United States Senate have written a letter to Silvergate Bank asking for information regarding any relationship the bank may have had with FTX.

Photo by Ian Hutchinson / Unsplash

According to reports, three members of the United States Senate have written a letter to Silvergate Bank asking for information regarding any relationship the bank may have had with FTX and company companies under the leadership of former CEO Sam Bankman-Fried.

Alan Lane, CEO of Silvergate, was the recipient of a letter from Senators Elizabeth Warren, John Kennedy, and Roger Marshall, as stated in a program shown on NBC News on December 6. According to reports (1), the MPs demanded that the bank reveal specifics on its relationship with FTX businesses in response to "new and grave claims" over the company's business activities.

According to reports, the lawmakers said that.

"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. Because sources show that Silvergate enabled the movement of FTX client monies to Alameda, we are concerned about the role that Silvergate played in these activities, you may say that "we are concerned about Silvergate's role in these actions."

In the letter, Silvergate was given until December 19 to respond with their response. According to reports, Warren stated that Silvergate could be "at the center of the unlawful movement of billions in FTX client monies," and he demanded that those involved be held accountable.

This is similar to the request that the senator made to the Department of Justice back in November, asking them to investigate and potentially punish individuals implicated in crimes that led to the collapse of FTX.

Silvergates Response

On December 5, Lane sent a public statement (2) criticizing "short sellers and other opportunists trying to capitalize on market volatility" with speculation and disinformation. This letter is presumed to have been released before the request for information.

NBC News reported that Lane said the bank was the

"victim of FTX's and Alameda Research's apparent misuse of customer assets and other lapses of judgment."

The CEO of Silvergate said the company had

"conducted significant due diligence on FTX and its related entities, including Alameda Research, both during the onboarding process and through ongoing monitoring, in accordance with our risk management policies and procedures."

Investigation hearings have been arranged by members of Congress to investigate the failure of SBF and to see what legislative or regulatory measures may be available to prevent a situation like this from happening again in the future.

The House Financial Services Committee leadership has asked Bankman-Fried to testify in a hearing scheduled for December 13, either remotely or in person. However, the CEO of FTX has indicated that he will wait until he has "finished learning and reviewing what happened" before complying with this request.