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Silvergate is Under the Radar of DOJ Investigation: Is it Involved in FTX Crash?

  • The crypto bank, located in California, has not been charged with any crimes

  • The collapse of FTX in November had a significant impact on Silvergate, which reported a $1 billion loss last quarter.

Silvergate is Under

Investigators are eager to uncover the extent of the transactions 

Between the crypto bank and FTX, despite the absence of any allegations of misconduct against the crypto bank.

According to reports, the US Department of Justice's scam unit is going to investigate cryptocurrency bank Silvergate due to its interconnections to the bankrupt FTX exchange and its associates.

According to a February 3rd report by Bloomberg, citing people familiar with the matter, the investigation centres around Silvergate's hosting of accounts associated with the businesses of former FTX CEO, Sam Bankman-Fried. This inquiry has raised eyebrows in the financial world, as it could potentially have far-reaching implications for the industry.

The United States Department of Justice fraud unit is reportedly probing crypto bank Silvergate over its involvement with the now-bankrupt FTX exchange and its affiliates. Investigators are attempting to uncover the extent of Silvergate's dealings with FTX and Alameda, the company behind the exchange. Silvergate is not accused of any crime, but the probe is looking into whether the bank and other companies working with FTX were aware of the situation.

The federal investigators want to know if Silvergate and any other businesses associated with FTX were aware of the situation.

When Alameda opened an account with the bank in 2018, Silvergate asserted that it carried out proper research and continuous monitoring. The bank also stated that it has a comprehensive compliance and risk management program. However, the fallout from the FTX collapse has been significant, with Silvergate reporting a $1 billion loss last quarter and having to lay off 40% of its staff.

The investigation has caused Silvergate to suspend its dividends, citing “recent volatility in the digital asset industry.” The news has sent Silvergate stock tumbling to $17.14 in after-hours trading, a 92% drop from its all-time high of $220 in November 2021. Crypto trader Josh Rager has commented on how this criminal investigation may impact crypto exchanges with ties to Silvergate.

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