• A bipartisan group of senators has sent a letter to Silvergate, questioning the crypto bank about its knowledge of the FTX fraud.
• The senators suspect that Silvergate may have played a role in illegally transmitting customer funds to Alameda Research through the trading firm’s accounts with the bank.
• In December, Silvergate declined to answer similar questions due to “confidential supervisory information,” which was not acceptable for the senators.
US Senators Interrogate Silvergate
A bipartisan group of US senators is questioning crypto bank Silvergate about its knowledge of the FTX fraud. The politicians suspect that Silvergate may have played a role in illegally transmitting customer funds to Alameda Research through FTX’s accounts with the bank.
Letter Sent To Bank CEO
The senators sent a letter on Monday to Silvergate Chief Executive Officer Alan Lane, expressing their dissatisfaction with prior responses being “evasive” and “incomplete”. They noted that in December, Silvergate had declined to answer similar questions due to “confidential supervisory information” – an explanation deemed unacceptable by the politicians.
Suspicion Regarding Bank Knowledge
The senators suggested that it was necessary for both Congress and the public to understand any role that Silvergate may have played in FTX’s collapse – particularly given that they had turned to Federal Home Loan Bank as their lender of last resort in 2022. It remains unclear what exactly was known by Silvergate at this time, or if further action will be taken against them by Congress.
FTX & Alameda Research
FTX is a cryptocurrency derivatives exchange founded by Sam Bankman-Fried and Gary Wang in 2019. It offers perpetual swaps, futures contracts, options and spot markets across various digital assets such as BTC, ETH and XRP among others. On the other hand, Alameda Research is an institutional trading firm focused on algorithmic trading strategies across several asset classes including cryptocurrencies like Bitcoin (BTC).
Conclusion
It remains unclear how much knowledge or involvement either party had in this incident but it is yet another reminder of how important it is for organizations dealing with high-risk assets like cryptocurrencies need proper compliance protocols and measures in place at all times.