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The SEC has filed a lawsuit against the parent company of crypto-friendly bank Silvergate on suspicion of fraud on the failed FTX exchange. The parties reported that a settlement agreement had been reached.
The U.S. Securities and Exchange Commission (SEC) filed a statement of claim in the U.S. District Court for the Southern District of New York on July 1. The regulator accused Silvergate Capital, its former CEO Alan Lane and former risk Director Kathleen Fraher of knowingly violating the anti-Money Laundering Act and deliberately defrauding investors.
According to the SEC complaint, from November 2022 to January 2023, those suspected of wrongdoing told clients that the company constantly monitors the financial situation on the FTX exchange and the associated payment platform of the bank Silvergate Exchange Network, and also monitors all customer transactions from the point of view of funds safety and security.
"At all times and especially in times of crisis, public companies and their officials must speak honestly with the investing public. Instead of telling investors about the serious shortcomings of their compliance programs after the collapse of FTX, one of Silvergate's largest clients, they hid information about the unreliability of storage programs and were unable to track more than $1 trillion in their clients transactions. This includes almost $9 billion in suspicious transfers between FTX and related organizations. Silvergate's stock ultimately collapsed, wiping out billions of dollars of market value for investors," said Gurbir Grewal, Director of investigations at the SEC.
The regulator's appeal to the court notes that without admitting or denying the SEC's charges, Silvergate agreed to a final decision obliging it to pay a civil fine of $50 million. Lane and Freyer also supported the settlement agreement, agreeing to a five-year professional ban and civil penalties of $1 million and $250,000, respectively.
In June 2023, the official notification of the US Federal Reserve Board (FRS) announced that Silvergate Capital Corporation and Silvergate Bank agreed to voluntary self-liquidation, taking into account all the requirements of the regulator and the US Deposit Insurance Agency (FDIC).
The U.S. Securities and Exchange Commission (SEC) filed a statement of claim in the U.S. District Court for the Southern District of New York on July 1. The regulator accused Silvergate Capital, its former CEO Alan Lane and former risk Director Kathleen Fraher of knowingly violating the anti-Money Laundering Act and deliberately defrauding investors.
According to the SEC complaint, from November 2022 to January 2023, those suspected of wrongdoing told clients that the company constantly monitors the financial situation on the FTX exchange and the associated payment platform of the bank Silvergate Exchange Network, and also monitors all customer transactions from the point of view of funds safety and security.
"At all times and especially in times of crisis, public companies and their officials must speak honestly with the investing public. Instead of telling investors about the serious shortcomings of their compliance programs after the collapse of FTX, one of Silvergate's largest clients, they hid information about the unreliability of storage programs and were unable to track more than $1 trillion in their clients transactions. This includes almost $9 billion in suspicious transfers between FTX and related organizations. Silvergate's stock ultimately collapsed, wiping out billions of dollars of market value for investors," said Gurbir Grewal, Director of investigations at the SEC.
The regulator's appeal to the court notes that without admitting or denying the SEC's charges, Silvergate agreed to a final decision obliging it to pay a civil fine of $50 million. Lane and Freyer also supported the settlement agreement, agreeing to a five-year professional ban and civil penalties of $1 million and $250,000, respectively.
In June 2023, the official notification of the US Federal Reserve Board (FRS) announced that Silvergate Capital Corporation and Silvergate Bank agreed to voluntary self-liquidation, taking into account all the requirements of the regulator and the US Deposit Insurance Agency (FDIC).
