US Department of Justice Launches Investigation into Cryptocurrency Bank Silvergate for FTX and Alameda Connections

According to Bloomberg’s news, which is based on people with knowledge on the subject, prosecutors from the fraud unit of the US Department of Justice, Silvergate Capital Corp. company collapsed cryptocurrency It’s investigating its relationships with giants FTX and Alameda Research.

Examining Relationships Between Silvergate and FTX and Alameda Research

Those who asked not to be identified to disclose the confidential investigation said the criminal investigation examined Silvergate’s hosting of accounts linked to Sam Bankman-Fried’s business.

The review adds to the growing scrutiny of the California-based bank, which has also drawn the attention of politicians.

The crypto-friendly bank has not been charged with any wrongdoing and the investigation, which is in its early stages, could end without charges. Silvergate and representatives of the US Department of Justice in Washington, where the investigation is being conducted, declined to comment.

Silvergate was among the lenders most affected by the sudden collapse of FTX last November. The bank posted a loss of $1 billion last quarter and laid off 40% of its staff. The bank also said it took out billions of dollars in loans to stem the influx of deposits after Bankman-Fried’s stock market crashed.

The investigation, which began in recent weeks, addresses one of the biggest questions concerning the FTX incidents: What did banks and brokers working with Bankman-Fried’s companies know about what U.S. officials call a years-long scheme to defraud investors and customers?

According to Silvergate, Alameda opened an account with the bank in 2018, prior to the founding of FTX. The bank said it was reviewing transactions involving accounts associated with FTX and Alameda, and showed due diligence on the companies during the hiring process and ongoing follow-up.

Silvergate modeled itself as a bank for crypto companies and was one of the first service providers to serve the industry. The bank has built systems that allow real-time fiat transactions between crypto money customers with deposits.

*Not investment advice.

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