• The US Department of Justice has launched a probe into Silvergate Capital Corp. and its dealings with FTX and Alameda Research.
• Silvergate Bank, which was one of the chief backers of FTX, witnessed over two-thirds of its customer base withdrawing deposits worth $8 billion.
• Federal prosecutors in the DoJ’s fraud section are conducting a criminal probe into the bank’s dealings with FTX and Alameda Research.
The US DOJ Launches Probe
The United States Department of Justice has launched a probe into Silvergate Capital Corp. and its dealings with bankrupt crypto firm FTX and its sister concern Alameda Research. Prosecutors have begun investigations to determine if any fraudulent activities took place at either company that may have negatively impacted Silvergate or their customers.
Silvergate Bank Impacted
Silvergate Bank, which was one of the chief backers of FTX, witnessed over two-thirds of its customer base withdrawing deposits of over $8 billion after the crypto exchange collapsed. This resulted in a net loss of $1 billion for the bank in the fourth and final quarter of 2022.
Criminal Probe Underway
Federal prosecutors in the DoJ’s fraud section are conducting a criminal probe into the bank’s dealings, especially those with FTX and Alameda Research. The firm was requested by a bipartisan group of United States Senators for details on risk management practices and further information on its dealings with FTX. The increasing judicial scrutiny has continued to weigh down Silvergate’s performance as it has created FUD among wary investors, although no charges have been brought against them yet.
Background On Silvergate
Silvergate used to be a small US organization till it went public in November 2019 when it entered the crypto market, becoming a major player as a bank for crypto companies that were turned down by traditional banking service providers. Its shares reached all-time highs before crashing after news broke about their involvement withFTX’s collapse hit headlines across media outlets around the world.
The future remains uncertain for both Silvergate Capital Corp., as well as their customers who lost money due to their investments in FTX through this bank’s services or otherwise related to this case, especially considering that government bodies remain hostile towards cryptocurrencies overall despite there being no formal charges filed yet against Silver Gate itself or any individuals involved in this matter so far..