Silvergate Is in the Crosshairs of DoJs Fraud Squad: Shares Down

• DoJ’s Fraud Squad is questioning Silvergate for hosting accounts linked with SBF, FTX, and Alameda. 
• The bank is not accused of anything but is only being questioned for involvement and if they knew something beforehand. 
• Shares have dropped by nearly 69% since the collapse. 

The crypto-focused bank Silvergate Capital is in the crosshairs of the Department of Justice’s fraud squad for hosting multiple accounts linked with Sam Bankman-Fried, bankrupt crypto exchange FTX, and Alameda. These accounts were supposedly used for illegally moving customers’ funds. The question then arises, did the bank know of the wrongdoings beforehand?

Silvergate Capital, a crypto-focused bank, used to host some accounts linked with businesses of former crypto white knight Sam Bankman-Fried. The lender is now under pressure from United States lawmakers to reveal the details and all the information they had regarding the irregularities at FTX. 

It could be a coincidence that the crypto bank also worked with many crypto firms that either went bankrupt, faced serious scrutiny, or were under investigation, including the recent court favorites FTX and Alameda. Moreover, it must be clarified that Silvergate is only being questioned for its role in the matter and is not accused of anything at the moment. 

When a huge tree falls in the forest, many small trees, shrubs, and grass get crushed. When FTX fell, Silvergate too was deeply impacted, reporting nearly a $1 billion loss in the fourth quarter. The bank even had to let go of 40% of its staff and even took loans of billions of dollars to get through the liquidity crunch due to the collapse. 

Alameda had an account with the bank that opened in 2018; the exchange started in 2019. As per their claims, the bank performed the required due diligence and ongoing monitoring at the time. While a representative of the bank said, “the firm had a comprehensive compliance and risk management program.”

FTX used to wire the customers’ money to fake electronic retail websites, with the supposed motive of trading. This transfer was to hide the funds Alameda Research used and supposedly lost in the market. The accounts with the crypto bank were used in this deceit. 

It’s not the first time the bank is under question. Last week a bipartisan group of US senators in Congress sent a letter to the bank’s CEO, arguing the ambiguous answers provided by the bank when they were earlier asked about their role in the deceit. 

Sadly, Silvergate was close to the implosion and barely managed to stay out. Its shares dropped by nearly 63.9% from the time of the collapse. 

At the time of writing, it was trading at $18.83 with a correction of 10.21%, with an analyst rating of 2.10 for hold. The 52-week range is from $10.81 to $162.65, with the current rate near the lower end. Somehow the price target is around $36.18 with a 92.1% upside. 

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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