FTX Fraud: US Senators Question Silvergate’s Role in Misuse of Funds

• US Senators are questioning Silvergate Capital Corp about its knowledge of FTX’s alleged misuse of customer funds.
• The lawmakers allege that the company failed to fully respond to questions when approached on December 5.
• It is alleged that the assets were deposited into a Silvergate account of an Alameda subordinate referred to as North Dimension.

US Senators Question Silvergate About FTX Woes

A group of US senators is seeking new details from Silvergate Capital Corp about its knowledge of FTX’s alleged misuse of customer funds. In a letter directed to Silvergate CEO Alan Lane, the lawmakers alleged that the company failed to fully respond to questions about the firm’s ties to the collapsed crypto exchange when approached on December 5. Senators involved in the inquiry include Elizabeth Warren (D-Mass), Roger Marshall (R-Kansas) and John Kennedy (R-La).

Questions Asked By US Senators

The senators asked whether or not Silvergate knew about FTX’s alleged misuse of customer funds after they said the firm provided “evasive and incomplete” responses to an earlier inquiry. They stated that both Congress and the public deserve information in order to understand Silvergate’s role in FTX’s fraudulent downfall. Additionally, they asserted that rolling to the Federal Home Loan Bank as their banker of last resort in 2022 was not an acceptable rationale for failing to answer their questions.

FTX Executive Allegedly Involved in Fraudulent Scheme

Former FTX founder Sam Bankman-Fried and other high-level executives, such as co-founder Gary Wang and Alameda Research CEO Caroline Ellison, were accused of conducting a fraudulent scheme involving comingling billions of dollars worth of assets belonging to customers and Alameda Research hedge fund. Reportedly, these assets were deposited into a Silvergate account owned by an Alameda subordinate referred to as North Dimension according to Securities and Exchange Commission filings.

Silvergate Statement Regarding Inquiry

In response, a representative from Silvergate issued a statement saying: “We take our compliance program seriously and have cooperated with inquiries from all relevant regulators since this matter became public last year” They also stated that they will continue cooperating with all applicable regulatory inquiries going forward but declined further comment due to ongoing investigations by various government agencies.

Conclusion

The outcome remains uncertain at this time; however it is clear that US senators remain unsatisfied with Silvergates lack of response regarding what it knew about FTX woes prior them becoming public knowledge last year