US lawmakers request answers from Silvergate over ties to FTX: Report

Regulation

Three members of the United States Senate have reportedly penned a letter to Silvergate Bank requesting information about any relationship with FTX and business entities under former CEO Sam Bankman-Fried.

According to a Dec. 6 report from NBC News, Senators Elizabeth Warren, John Kennedy, and Roger Marshall sent a letter to Silvergate CEO Alan Lane. The lawmakers reportedly asked the bank to provide details on its relationship with FTX entities in response to “new and disturbing allegations” about its business practices.

“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,” reportedly said the lawmakers. “We are concerned about Silvergate’s role in these activities because of reports suggesting that Silvergate facilitated the transfer of FTX customer funds to Alameda.”

The letter gave Silvergate until Dec. 19 to send a response. Warren reportedly said Silvergate could be “at the center of the improper transfer of billions in FTX customer funds,” calling for accountability for those responsible. This echoed the senator’s request to the Department of Justice in November to potentially prosecute individuals involved in wrongdoing in the collapse of FTX.

Lane released a public letter on Dec. 5 — presumably prior to the request for information — criticizing “short sellers and other opportunists trying to capitalize on market uncertainty” with speculation and misinformation. The CEO said Silvergate had “conducted significant due diligence on FTX and its related entities including Alameda Research” as part of its onboarding process and beyond, with NBC News reporting Lane said the bank was the “victim” of FTX’s and Alameda Research’s “apparent misuse of customer assets and other lapses of judgment.”

Related: Despite endless media appearances, SBF unlikely to testify on Dec. 13

Members of Congress have scheduled investigative hearings exploring the downfall of SBF and what, if any, legislative or regulatory solutions may be available to prevent a similar occurrence in the future. Leadership with the House Financial Services Committee have called on Bankman-Fried to testify in a Dec. 13 hearing either remotely or in person, but the FTX CEO suggested he would wait until he had “finished learning and reviewing what happened.”