US SEC sues Silvergate for securities fraud (updated)

Silvergate Capital

01/07/2024 21:58

(Adds details on filing and background on Silvergate)
       July 1 (Reuters) - The U.S. Securities and Exchange
Commission (SEC) has sued crypto-focused bank Silvergate Capital
Corp in a federal court for securities fraud, a court filing
showed on Monday. 
    The Commission alleged that the company made a "fraudulent
scheme" to mislead investors about its bank secrecy and
anti-money laundering compliance programs as well as its "dire
financial condition", after the collapse of crypto exchange FTX
in November 2022.
    "The bank also failed to detect nearly $9 billion in
suspicious transfers by FTX and its related entities," the SEC
alleged.
    Reuters could not independently verify the claims in the
court filing by the SEC. 
        Silvergate did not immediately respond to a Reuters
request for comment. 
    In March 2023, Silvergate, which ventured into crypto in
2013, decided to wind down operations and voluntarily liquidate
following losses due to the panic that ensued after FTX
collapsed. 
    The bank, founded in 1998, had disclosed it sold additional
debt securities in 2023 at a loss and that further losses meant
the bank could be "less than well capitalized" before plans of
shuttering it came to light. 

 (Reporting by Pritam Biswas in Bengaluru; Editing by Mohammed
Safi Shamsi)
 ((Pritam.Biswas@thomsonreuters.com;))