• Senators are questioning Silvergate Capital Corp about its knowledge of FTX’s alleged misuse of customer funds.
• The inquiry includes a renowned cryptocurrency critic, Elizabeth Warren (D-Mass), and Republicans Roger Marshall (R-Kansas) and John Kennedy (R-La).
• It is alleged that high-level executives conducted a fraudulent scheme involving comingling billions of dollars of FTX customer funds with an affiliated hedge fund called Alameda Research.
US Senators Question Silvergate on 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 asserted that the company failed to fully respond to questions about the firm’s ties to the collapsed crypto exchange when approached on December 5th. The senators involved in the inquiry include a renowned cryptocurrency critic, Elizabeth Warren (D-Mass), and Republicans Roger Marshall (R-Kansas) and John Kennedy (R-La).
Silvergate Responses Called „Evasive“
In the letter, the lawmakers stated that they were „dismayed by [Silvergate’s] evasive and incomplete response“ to their December 5th inquiry concerning Silvergate’s role in the improper transfer of FTX user funds to Alameda Research. They further argued that both Congress and the public deserve necessary information to understand Silvergate’s role in FTX’s fraudulent downfall.
FTX Executives Accused Of Fraudulent Scheme
The 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 by Securities & Exchange Commission investigators of conducting a fraudulent scheme involving billions of dollars in customer funds being deposited into an Alameda subordinate account referred to as North Dimension.
Senators Seek Answers From Silvergate
The senators questioned whether or not Silvergate knew about these activities after noting that it provided “evasive and incomplete” responses following their initial inquiry. Further, they asserted that citing federal loan banking as its banker of last resort was not an acceptable rationale for failing to provide answers or information.
Conclusion
As such, it remains unclear what exactly happened between Silver Gate and FTX prior to its collapse but lawmakers are hoping for more transparency from both entities going forward so investors can have confidence in cryptocurrencies moving forward.