Silvergate Bank didn’t adequately monitor $1 trillion in crypto transactions, SEC says

Silvergate Bank, once a cornerstone of the crypto fiscal world until its illness successful aboriginal 2023, defrauded its investors by lying astir its anti-money laundering controls and misleading investors astir however the fallout from the FTX illness would impact it, the Securities and Exchange Commission says successful a lawsuit. Also named successful the suit were the company’s main enforcement officer, main hazard officer, and main fiscal officer.

Silvergate said it had an effectual anti-money laundering (AML) programme tailored specifically to crypto but really didn’t adequately show “approximately $1 trillion” successful transactions, the ailment says. Silvergate besides didn’t announcement “nearly $9 cardinal successful suspicious transfers” by FTX entities.

When FTX collapsed, the crypto manufacture panicked, starring to a tally connected Silvergate and a liquidity crisis. At that point, Silvergate’s main fiscal serviceman Antonio Martino “engaged successful a fraudulent strategy to mislead investors astir the Bank’s dire fiscal condition,” the SEC alleges. Martino knew the slope had borrowed billions, which it would person to repay successful January and February 2023. The lone mode that could hap would beryllium by selling securities, but Martino approved an net merchandise that “falsely stated the Bank expected to merchantability lone $1.7 cardinal successful securities during the First Quarter of 2023, of which it had already sold $1.5 billion.”

That net merchandise understated Silvergate’s losses from its securities sales, the SEC ailment alleges. Martino besides lied connected the bank’s quarterly net call, according to the complaint.

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