- U.S. lawmakers are seeking details from Silvergate Bank regarding its ties to FTX and Alameda.
- Silvergate received a similar letter last year but couldn’t provide a satisfactory response.
A group of Bipartisan U.S. Senators have brought Silvergate Bank under the spotlight for its relationship with bankrupt crypto exchange FTX and sister firm Alameda Research.
Senators Elizabeth Warren, John Kennedy, and Roger Marshall sent a strongly worded letter to the bank’s parent firm, Silvergate Capital, seeking clarity on its involvement with Sam Bankman-Fried’s failed crypto empire.
Silvergate’s initial response was unsatisfactory
The letter came less than two months after a similar enquiry was sent to the bank by the Senators in December 2022. The lawmakers were not satisfied with Silvergate’s attempts to hold back details because it was “confidential supervisory information.”
“This is simply not an acceptable rationale,” they stated in response to Silvergate’s evasive and incomplete response.
Noting the bank’s involvement in FTX’s improper use of customer funds, the lawmakers have demanded answers to various questions pertaining to its risk management measures, due diligence process and accountability following the significant lapses.
Regarding Silvergate’s risk management practices, the senators asked the bank to provide specific details about its policies and procedures, what their due diligence revealed, if they ever identified any wrongdoing by FTX and its related entities, and what bank officials did with any such information.
Silvergate’s Chief Risk Officer, Tyler Pearson, was also a point of concern. He was asked why he remained an important part of the risk management team despite the failures with FTX and Alameda. Moreover, he was questioned whether bank executives were held accountable for these failures.
The lawmakers also asked Silvergate about their compliance with the Federal Reserve, the number of exams conducted, and the problems with their due diligence. Additionally, the bank had to answer about independent audits conducted, who conducted these audits, and if any problems were identified. The lawmakers stated that they expected the answers to their queries by 12 February 2023.