DOJ Probes Silvergate Over FTX, Alameda Research Involvement

Posted on February 20th, 2023 at 4:00 PM
DOJ Probes Silvergate Over FTX, Alameda Research Involvement

U.S. Department of Justice (DOJ) prosecutors have launched a criminal investigation into Silvergate’s dealings with FTX and Alameda Research, including Silvergate’s hosting of accounts tied to Sam Bankman-Fried’s businesses. 

However, Silvergate has yet to be accused of any wrongdoing and the investigation potentially could end without the filing of any charges. Silvergate has faced challenges amidst FTX’s collapse as the bank reported a $1 billion loss last quarter and subsequently terminated 40% of its staff. The DOJ initiated the probe in part to determine whether banks and intermediaries working Bankman-Fried’s businesses were aware of his scheme to defraud millions of investors. 

According to Silvergate, Alameda Research opened an account with the crypto bank in 2018 before FTX was launched. Silvergate additionally noted that it is reviewing transactions involving FTX and Alameda accounts and that it previously conducted due diligence on the firms during the onboarding process and via periodic monitoring. Furthermore, Silvergate is defending itself against a separate class action suit alleging securities fraud by investors who accuse the bank of withholding information about its financial controls, citing the FTX meltdown.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters. 

Tags: Eccleston, Eccleston Law

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