US Senators Demand Answers from Silvergate Capital Corp Over FTX's Misuse of Customer Funds

cryptonews.com:

US senators have turned their focus to Silvergate Capital Corp. yet again, saying that the company's responses to a previous inquiry over its ties to the fallen FTX exchange were “evasive and incomplete.”

According to Bloomberg, senators from both sides of the aisle are demanding to know whether the parent company of crypto-focused Silvergate Bank knew about FTX’s misuse of customer funds. 

The questions were sent in a letter to Silvergate's Chief Executive Officer Alan Lane on Monday by, among others, Democrat Elizabeth Warren and Republicans Roger Marshall and John Kennedy. The senators argued that, 

"The firm in December had declined to fully answer related questions, citing restrictions on disclosing "confidential supervisory information"," Bloomberg wrote.

The senators reportedly argued in the letter that,

"This is simply not an acceptable rationale. [...] Both Congress and the public need and deserve the information necessary to understand Silvergate’s role in FTX’s fraudulent collapse, particularly given the fact that Silvergate turned to the Federal Home Loan Bank as its lender of last resort in 2022."

In early January, Silvergate said that it held $4.3 billion in short-term Federal Home Loan Bank advances and that it had some $4.6 billion cash and cash equivalents at the end of 2022 - which were put towards preventing a run on deposits following FTX’s collapse. 

The senators gave Silvergate until February 13 to respond to its inquiries, including: 

Following the senators’ December letter, the bank claimed that FTX's parent company Alameda Research opened an account in 2018 prior - before FTX was founded, said Bloomberg, and that it was reviewing transactions involving accounts associated with FTX and Alameda. 

However,