Originally Posted By -JR⏩

When it came to pitching banking services to the crypto community, Silvergate Bank held an ace card: an endorsement from none other than Sam Bankman-Fried, the celebrity founder of FTX, a large and popular crypto exchange.

“Life as a crypto firm can be divided up into before Silvergate and after Silvergate,” Bankman-Fried gushed in a testimonial featured recently, and prominently, on Silvergate Bank’s website. “It’s hard to overstate how much it revolutionized banking for blockchain companies.”

Now, with billions of dollars missing from a bankrupt FTX’s coffers, Bankman-Fried’s tribute has vanished from San Diego-based Silvergate’s website. Silvergate’s role as a banker to FTX and other Bankman-Fried entities is raising questions for Alan Lane, its chief executive, and creating headaches for the institution’s public shareholders.

Late Monday, Elizabeth Warren, the Massachusetts Democrat and member of the Senate banking committee, and two Republican colleagues sent Lane and Silvergate a request for information about the bank’s relationship with FTX and the Bankman-Fried entities.

“In the weeks since FTX’s shocking collapse, new and disturbing allegations about the company’s business practices have continued to surface,” the letter said, “including the reports that Mr. Bankman-Fried ‘secretly transferred some $10 billion of customer funds to his trading vehicle, Alameda Research,’ to fund ‘risky bets,’ violating both U.S. securities laws and FTX’s own terms of service. We are concerned about Silvergate’s role in these activities because of reports suggesting that Silvergate facilitated the transfer of FTX customer funds to Alameda.”

The letter, co-signed by Republican Sens. John Kennedy of Louisiana and Roger Marshall of Kansas, also questioned Silvergate’s vigilance in flagging suspicious activities in client accounts as it is required to do under banking regulations.

“Your bank’s involvement in the transfer of FTX customer funds to Alameda reveals what appears to be an egregious failure of your bank’s responsibility to monitor for and report suspicious financial activity carried out by its clients,” the letter said. Silvergate has until Dec. 19 to respond to the lawmakers.

Silvergate is one of only a handful of U.S. banks allowing customers to move dollars or other so-called fiat currencies onto crypto exchanges. FTX and related companies, including Alameda Research, its hedge fund and proprietary trading firm, held 20 different accounts at Silvergate, according to a recent FTX bankruptcy filing. Billions of dollars in wire transfers sluiced through Silvergate to FTX Group in recent years, according to a lawsuit filed against Bankman-Fried and his top executives.

It is not yet clear what transpired at FTX, Alameda and other affiliated entities or where the billions of dollars in missing customer funds wound up. But in a conversation with an investment manager, a former top FTX employee said Silvergate was FTX’s primary banking partner. In the conversation, a recording of which was shared with NBC News, the former employee described transfers of funds between FTX’s Silvergate account, which included FTX customers’ money, and accounts belonging to other entities believed to be controlled by Bankman-Fried, including Alameda Research, the supposedly separate crypto trading operation. The investment manager told NBC News he shared some of the former employee’s statements with members of the Senate banking committee.

FTX’s bankruptcy filings, public statements by Bankman-Fried and news reports raise questions about possible commingling of customers’ money and transfers of funds between FTX and Alameda.

“Silvergate appears to be at the center of the improper transfer of billions in FTX customer funds. Americans need answers. Those guilty of wrongdoing must be held accountable,” Sen. Warren said in a statement.

In response to the lawmakers’ letter, Silvergate provided this statement: “We received Senator Warren’s letter and look forward to answering her questions openly and transparently. Like many others, Silvergate was the victim of FTX’s and Alameda Research’s apparent misuse of customer assets and other lapses of judgment and we believe our full cooperation will help set the record straight about our role in the digital asset ecosystem.”

Originally Posted By MrJensenn⏩

Originally Posted By gwg77⏩

Originally Posted By gwg77⏩

Originally Posted By gwg77⏩

Originally Posted By gwg77⏩

Originally Posted By gwg77⏩

Originally Posted By mesobuild⏩

Originally Posted By -JR⏩

Originally Posted By gwg77⏩

Originally Posted By gwg77⏩

Originally Posted By Evolutionary1⏩

Mark Botnick, a spokesman for Mr. Bankman-Fried, defended the interviews.

“Sam is not concerned about what others may think,his focus right now is doing anything he can to help FTX customers and make sure they are well-informed,”he said. “The only person who can honestly tell Mr. Bankman-Fried’s story is Mr. Bankman-Fried, and he will continue to do so.”

Originally Posted By gwg77⏩