• Senator Warren demanded answers from Silvergate about its participation in transferring FTX customer funds to Alameda.
  • Silvergate defended itself against the allegations reaffirming cooperation to set the record straight.
  • Earlier this week, the bank also had to confirm minimal exposure to BlockFi, which filed for bankruptcy a day before.

Silvergate has been at the center of fear, uncertainty and doubt (FUD) for the last couple of days. Stemming from BlockFi, the FUD has spread to Silvergate’s connection to the now-bankrupt exchange FTX. In accordance with the same, United States Senator Elizabeth Warren, John Kennedy and Roger Marshall raised their doubts.

Silvergate faces scrutiny 

Silvergate ended up at the crosshair of US Senators on Monday as the lawmakers targeted the bank in a letter. The senators questioned the crypto bank about its role in reportedly mediating the transfer of funds between FTX and Alameda Research, its sister firm. The letter stated,

“[There are] reports that Mr. Bankman-Fried “secretly transferred some $10 billion of customer funds to his trading vehicle, Alameda Research,”3 to fund “risky bets,” violating both US securities laws and FTX’s own terms of service.”

As per the letter, the Senators are demanding answers about Silvergate’s relationship with FTX, as the bank had previously stated that its association was only limited to deposits. However, Silvergate did not specify what other entities in the FTX ecosystem the bank had relations with. This was revealed in FTX’s bankruptcy case, where Silvergate was revealed to have affiliations with Alameda, FTX.US, FTX Europe and Japan.

In response to this, Silvergate issued a statement saying,

“We received Senator Warren’s letter and look forward to answering her questions openly and transparently. Like many others, Silvergate was the victim of FTX’s and Alameda Research’s apparent misuse of customer assets and other lapses of judgment and we believe our full cooperation will help set the record straight about our role in the digital asset ecosystem.”

Not the first rodeo

Monday’s letter from the Senators is not the first instance that exacted a clarification from Silvergate, as just last week, it had to do the same in response to BlockFi’s bankruptcy filing.

On November 29, a day after the filing, Silvergate announced its exposure to the lending firm, albeit minimal. The bank stated that it had no investment in BlockFi either and that Silvergate’s platform was built to manage stress and volatility, as such, bearing no significant impact.


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