It was almost exactly one year ago when Silvergate Bank — a small bank located in La Jolla, California, known for working with various cryptocurrency companies, including FTX — let regulators, investors, and customers know that after a run on deposits over the course of several months, it would be throwing in the towel and shutting down.

The closure represented a drastic downturn in fortunes for Silvergate, which had become the preeminent bank for crypto companies and had grown significantly since its founding in 1988. Briefly, the bank’s shares valued the company at about $7 billion — today, pink sheet shares value Silvergate at $10 million.

But Silvergate was only the beginning of the regional banking crisis and it actually turned out to be the easiest and simplest to clean up. As is becoming more and more clear by the day, the regional banking crisis of 2023 didn’t end when the calendar year turned over.

Read more: Crypto banking giant Silvergate is no more following NYSE delisting

The real crisis begins

On the same day that Silvergate announced its voluntary closure, another California bank, Silicon Valley Bank, made some dire announcements about selling off distressed assets, taking out loans, and the emergency sale of stock. This, inevitably, led to a bank run, and days later, a collapse.

But this collapse came with threats and warnings from venture capitalists and tech companies that had kept far more than the insurable $250,000 in their accounts. They suggested that if these deposits weren’t essentially insured by the Federal Depositors Insurance Corporation (FDIC), there would be a knock-on effect for regional banks across the country.

While the FDIC did decide to insure all depositors’ accounts up to any number at Silicon Valley Bank, it didn’t stop the VCs and companies from fleeing the bank in droves — and, in fact, despite the FDIC agreeing to bailout all the depositors, many other regional banks began to instantly feel the pinch.

Only days after the rescue of Silicon Valley Bank, Signature Bank in New York — another crypto-friendly bank — faced any bank’s worst nightmare, namely, a run on customer deposits in the wake of the turmoil. Similar to the promises made with depositors from Silicon Valley Bank, the FDIC promised that everyone would be made whole, regardless of the $250,000 limits on insurance.

California remained the epicenter for the crisis, with First Republic and PacWest Bancorp failing and being acquired, respectively, by mid-2023.

And then everything… just went on.

Read more: The show goes on: How Signature Bank’s bailout saved Broadway

Trauma without wisdom

So a year on from the crisis, the question remains: “What has been learned and how has the system changed?” The not-too-shocking answer is that, collectively, the American public, investors, and businesses have learned nothing and the system has refused to change.

A moment that could’ve been seized by banking critics and optimists alike was instead squandered. It was used as an opportunity to whinge about poor banking business practices and Federal Reserve rate hikes, instead of addressing depositor insurance policies and poorly thought-out hedging decisions.

A very real, very troubling crisis wasn’t truly averted — it was left to linger and fester, like a wrapped wound without antibiotics — and today we’re paying the price.

Only yesterday, New York Community Bancorp, one of the banks to purchase assets from the now-defunct Signature, was given a billion dollars to keep operations going. This private bailout comes after the stock plummeted 75% from recent highs.

In essence, what’s been learned yet again by the public, banks, and politicians is that fixing a leaky roof is unnecessary until a roof completely falls in on itself — that worthwhile practices and obvious changes don’t need to be instituted, even after times of crisis. It is unfortunate that regulators and politicians couldn’t see the forest for the trees and that even as another regional bank reached the teetering edge of failure the issues continue to go unaddressed.

Perhaps, when the pain is a little worse, when more depositors are hurt, and the FDIC can’t continue useless policies like $250,000 caps for insured accounts, action will be taken to stop wasteful and stupid banking and finance policies. But until then it’s business as usual.

See you at the next bank run.

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Bank records and company messages have revealed that Binance US relied on Binance to process payments and cover payroll, in complete contradiction to the firm’s insistence that it operated independently, Reuters reported on Monday.

Now-defunct Silvergate Bank authorized Binance exec Guangying Chen to move funds held in Binance US accounts in 2019 and 2020, bank records revealed. Chen, a close associate of Binance chief Changpeng Zhao (CZ), was asked by US employees to process payments and cover payroll, according to company messages.

In February, Reuters reported that an employee in Chen’s team had access to one Binance US Silvergate account, which transferred over $400 million to Merit Peak, a trading firm controlled by CZ, back in 2021. Further, the outlet reported that Binance commingled customer funds with corporate revenues in Merit Peak’s Silvergate account. Binance denied both investigations.

This latest news further discredits Binance’s claims that its US arm had “exclusive control” of its accounts. According to messages and documents reviewed by the outlet, Chen signed documents allowing her to “open accounts, transact, and otherwise operate” accounts on behalf of Binance US.

Chen further signed agreements with Silvergate to act as ‘Primary Admin User’ for five bank accounts:

• a customer deposit account,
• a corporate clients account that sent funds to Merit Peak, and
• three other accounts.

According to the agreements, Chen was allowed to withdraw and deposit funds and had the authority to grant others the same autonomy. She allowed her deputy, Susan Li, to manage US transactions and approve payments to cover the firm’s payroll. “Approved from my end,” one message Li sent to a Binance US executive read in response to a payroll request. 

More worrying, Binance US’s chief exec at the time, Catherine Coley, sent messages saying that she and her team didn’t have control over the accounts, and therefore Binance US lacked control over its own finances. In 2020, Coley and her team repeatedly asked Li to grant them access to Binance US’s own bank accounts and expressed concern over regulatory scrutiny.

Read more: From the US to Australia, regulatory knot around Binance tightens

“I think it makes sense [Binance US] has its own login for the regulatory perspective,” a Binance US finance director wrote to Li in November 2020. Coley left Binance US in mid-2021 after clashing with CZ over the situation.

According to Binance, however, everything’s kosher. Binance US spokesperson Christian Hertenstein responded to Reuters’ latest findings, claiming that ever since leadership changed hands in late 2021, “no one other than Binance US officials have had control or access to Binance US accounts.”

“Customer funds have not been misused or co-mingled,” Hernstein said, but added that it’s “difficult to speak to each and every detail” because Binance US’s management team has “turned over completely since the time period in question.”

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Silvergate Capital, the parent company to what was once the single largest crypto banking partner, Silvergate Bank, has finally been delisted from the New York Stock Exchange (NYSE) and begun the liquidation process.

California-based Silvergate first IPOed on the NYSE in June 2019 for $12/share, rocketing to an all-time high of almost $240/share in November 2021. Today, a share of Silvergate Capital Corp trades for less than $1 on OTC Markets. The delisting was confirmed on May 11, 2023, with over 200 employees being let go and all assets set to be liquidated by November.

Deposits and funds from FTX that were stored at Silvergate were seized in January of this year, and with losses mounting from fleeing depositors, Silvergate CEO Alan Lane decided to voluntarily wind up the bank.

Desperate attempts to save Silvergate

Before the closure of the go-to crypto bank, numerous attempts were made to salvage it: Brendan Blumer — an EOS and Block.One co-founder — dumped tens of millions of dollars into the bank, buying almost 10% of total ownership late last year. Citadel and Cathie Wood’s ARK Invest also purchased millions of dollars worth of shares, and millions in advances from the Federal Home Loan Banks (FHLB) were taken out by Silvergate.

None of the cash infusions were able to save the floundering financial institution.

Read more: Why is Silvergate Bank still listed on the NYSE?

The beginning of the end

The same day that Silvergate Capital announced its delisting from the NYSE, OTC Markets (where Silvergate shares are now traded) released an article about how disclosures will be key to the future of cryptocurrency — both calling out Washington and the SEC for failure to clarify “regulations and advance comprehensive legislation” and acknowledging that proper disclosures from individuals and companies in the crypto space are few and far between.

Silvergate’s disintegration seemingly set off a slew of regional bank failures on the West Coast, from Silicon Valley Bank to Signature Bank. Indeed, reverberations were still being felt at the beginning of May when First Republic was closed and taken over by the Federal Deposit Insurance Corporation.

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A report by the Congressional Research Service (CRS) has outlined the role of cryptocurrency in the failures of banks Silvergate, Silicon Valley, and Signature, stating that while the banks’ exposure to crypto was minimal, the perception of risk “may have driven non-crypto firms/individuals to make significant withdrawals.”

Analyst Paul Tierno from CRS, a nonpartisan agency that serves to inform Congress, concluded in their report that “volatility in crypto markets may expose banks to liquidity risks that could ultimately lead to fatal losses,” but contrary to beliefs, the banks’ exposure to crypto “was somewhat limited.” Dwindling deposits from crypto firms led banks to sell securities at a loss, which exacerbated liquidity issues and solvency.

“After reaching an all-time high of around $3 trillion in November 2021, crypto lost more than two-thirds of its market capitalization by December 2022,” Tierno wrote. “As digital asset prices fell, centralized crypto platforms and stablecoin issuers experienced redemptions, likely causing them to draw down deposits held at these banks. 

“To meet withdrawal demand, banks sold ostensibly safe securities for losses, affecting their liquidity and—in some cases—their solvency.”

Read more: How crypto market chaos affected US bank stocks

The report explained that in Q4 2022, Silvergate’s deposits fell by more than half, while Signature’s deposits dropped by 15% over the same period. “So in this case, losses were not realised on crypto-related assets, but crypto deposit withdrawals caused banks to sell other assets at a loss.”

The report by CRS serves as a reminder that crypto market chaos affected US bank stocks — and that SVB, Silvergate, and Signature were pushed over the edge by fear, uncertainty, and doubt.

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Fully compliant crypto companies should be placed on a ‘white list’ to help banks to determine which ones are safe to expose to their clients, says CryptoUK, the UK’s leading crypto trade organization.

As reported by CoinDesk, in a letter to regulators, CryptoUK says that circulating a list of safe firms is just one of a number of measures the government can take to prevent exchanges from being cut adrift from the financial system.

The suggestion is a response to increasing numbers of crypto companies being ‘de-banked’ due to financial institutions’ desire to protect their clients from potentially risky products.

The relationship between crypto and the banking industry is particularly turbulent at present, with prominent crypto banks Silvergate, Signature Bank, and Silicon Valley Bank either collapsing or being bailed out by the US government.

Read more: Blame the Fed: David Sacks and the VC who cried bank-run

In the letter, sent on Tuesday, CryptoUK said: “We believe that government action is now warranted because banks are implementing blanket bans or restrictions instead of taking a risk-based and case-by-case approach.

“[Our members] believe there are a number of potential solutions that can be explored, including creating a ‘white list’ of platforms that have engaged with the UK’s regulatory perimeter.”

The letter also suggests that, if this or a similar approach isn’t taken, the UK risks torpedoing its ambitions of becoming an established ‘crypto asset hub.’

As detailed by CoinDesk, another letter from CryptoUK also called upon the Financial Conduct Authority and Payment Systems Regulator to find a solution to the de-banking problem.

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By November 16, EOS and Block.One founder Brendan Blumer had spent over $90 million to buy 9.27% of Silvergate stock. Since then, the crypto-friendly bank has collapsed by over 80% — Blumer has personally lost at least $74 million.

In a press release announcing Block.One and Blumer’s investments, Blumer is referred to as a passive investor. Technically, the company Block.One owned a 7.5% stake in Silvergate as of November 16; Blumer owned the 1.7% balance listed on the SEC filing. For regulatory purposes, Blumer admitted to being the beneficial owner of all 9.27%.

Silvergate was known to be a major bank for FTX and Alameda Research — FTX filed for bankruptcy five days before Blumer’s investment. Now, Silvergate is the latest ship to sink to the bottom of a rather cluttered crypto pool. Why did Blumer make such a blunder?

EOS and Block.One made and paid big money

Dan Larimer, Brock Pierce, and Blumer launched Block.One in 2017. Like many digital asset startups, Block.One raised a significant amount of money at the height of the initial coin offering (ICO) craze — Block.One claimed it sold over $4 billion EOS tokens between June 2017 and June 2018. However, US government researcher John Griffin flagged most of that sum as wash trading.

Read more: Silvergate warns investors it may not survive the year

In 2019, it paid a $24 million fine to settle a civil charge by the Securities and Exchange Commission (SEC) for selling unregistered securities. This was rather light compared to cases like Kik and Telegram, which had to issue full refunds to token buyers or shut down operations.

In an interview following the SEC fine, Blumer mentioned plans to build the EOS ecosystem and invest in EOS-oriented businesses. Block.One sunk an astonishing $150 million into Voice, an EOS-based social media platform, and further spent $30 million to acquire the domain name Voice.com — it’s now an NFT marketplace with negligible trading volume.

Block.One announced an ostensibly enterprise-quality “EOSIO for Business” platform — all mention has since been removed from its website.

The company also faced legal challenges, including an investor lawsuit alleging that it conducted a fraudulent ICO. The investors won a $27.5 million settlement that was blocked by a federal judge in August. District Judge Lewis Kaplan of the Southern District of New York questioned whether the US had jurisdiction, citing concerns about whether the token sales were primarily “domestic transactions” — Block.One was based in Hong Kong when it sold the tokens.

Why did Brendan Blumer invest in Silvergate?

Banks servicing the crypto industry are scarce and dwindling rapidly. Maintaining a US bank account — any bank account, at all — as a major crypto industry participant is exceedingly difficult.

Silvergate Capital developed a reputation as a digital asset-friendly bank, while so many others turned away customers. This reputation might have attracted Blumer’s attention, even as Silvergate’s biggest account holders, FTX and Alameda Research, were imploding.

EOS started as a promising blockchain. Community members joked that it stood for “Ethereum On Steroids.” By the end of 2021, EOS’ value had declined from $10 to $4.40. Beyond a few popular apps, it was barely used.

Read more: Judge won’t okay Block.one settlement after lead plaintiff takes lower offer

Block.One got blamed for dragging it down. At least one community member – Yves La Rose – opined the EOS community could salvage the situation if they could separate it from Block.One and recoup some of the money it raised during a virtual event attended by mostly Chinese users. He accused Block.One of failing to live up to the promises it made while conducting its ICO.

If Yves La Rose had addressed the EOS community more recently, he might have pointed to Block.One’s and Blumer’s ownership of a large stake in Silvergate Capital of one example of the company straying from its promise to invest primarily in EOS-based ventures.

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Investors are worried that Silvergate might file for bankruptcy protection soon. Long-time critic and short-seller Marc Cohodes predicts the bankruptcy filing could arrive before Monday and that its CEO Alan Lane should face federal charges.

The publicly traded bank has delayed the release of its 2022 annual report. It admitted a “going concern” regarding its ability to survive financially. Silvergate has requested an extension of time from the Securities and Exchange Commission (SEC) in order to evaluate “internal controls over financial reporting.” Crowe LLP, auditors of Silvergate’s finances, have not signed their audit of the bank’s fourth quarter finances.

If the bank collapses, the Federal Deposit Insurance Commission (FDIC) might overtake the bank in order to protect depositors, liquidate assets, and facilitate its orderly dissolution.

The digital asset-friendly bank faces severe losses, a bank run, and numerous regulatory issues after Sam Bankman-Fried’s (SBF) empire collapsed. Alameda Research and FTX were once Silvergate’s biggest customer duo. FTX allegedly routed customers’ deposits through Alameda Research’s account at Silvergate. Several digital asset companies are actively terminating their relationship with Silvergate.

• Customers withdrew over $8 billion in deposits from Silvergate after FTX collapsed. The withdrawals contributed to Silvergate’s nearly $1 billion loss in the final quarter of 2022.
• USDC issuer Circle recently announced it was “unwinding” its relationship with Silvergate, which could impact some of its services.
• Meanwhile, Coinbase said it would no longer use Silvergate to process deposits and withdrawals.

Shares traded down 57% on March 2nd alone. Zooming out, shares are 97% below all-time highs in November 2021. State Street, Blackrock, and Citadel Securities hold significant stakes in Silvergate. EOS co-creator Brendan Blumer bought a 9.3% stake in Silvergate last November — enough to warrant a regulatory filing and making him its largest shareholder.

Possible bankruptcy talks at Silvergate

Silvergate also faces class-action lawsuits. Harmed investors allege Silvergate failed to warn them about its deficiencies in anti-money laundering protocols. The lead plaintiffs, which include a teachers’ pension fund and state-managed retirement funds, claim to have lost millions on their investments in Silvergate shares. US District Judge Cathy Ann Bencivengo appointed two law firms to serve as special counsel representing the plaintiffs.

Silvergate is systemically important to the crypto industry. According to David Gerard and Amy Castor, The Bank for International Settlements’ Basel III bank monitoring report for February 2023 indicates that 61.7% of total, worldwide, cryptoasset prudential exposures were “almost certainly” held by Silvergate. Gerard and Castor estimate this based on Silvergate’s bitcoin-secured loans to MicroStrategy and bitcoin miners.

Read more: Citadel Securities discloses hefty stake in struggling Silvergate

Naturally, politicians did not let a good crisis go to waste. Three senators, including Elizabeth Warren, sent a letter to Silvergate CEO Alan Lane expressing concern about introducing “crypto market risk into the traditional banking system.” Warren separately called on banking regulators to scrutinize banks doing business with digital asset firms more closely.

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Struggling Silvergate Capital, owner of crypto-friendly bank Silvergate, has warned investors that it expects to record further losses for 2022 that have significantly impacted its “ability to continue.” Its share price tumbled 30% following the news, from $13.60 to $9.50 at press time.

Silvergate notified the Securities and Exchange Commission (SEC) on Wednesday that it won’t be able to file its annual 10-K form on time for the fiscal year 2022. It cited the last-minute sale of additional investment securities to repay outstanding loans from the Federal Home Loan Bank of San Francisco as a reason for the delay, along with the sale of additional debt securities in January and February 2023.

The bank initially posted a loss of $949 million for the final three months of 2022, which is now expected to increase.

“These additional losses will negatively impact the regulatory capital ratios of the Company and the Company’s wholly owned subsidiary, Silvergate Bank, and could result in the Company and the Bank being less than well-capitalised,” it wrote in the filing.

“In addition, the Company is evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements.”

Silvergate alerted the SEC that it was currently reevaluating its business strategies due to “business and regulatory challenges.” Indeed, the filing confirmed reports that the US Justice Department is investigating the firm, and also mentioned investigations by banking regulators and “congressional inquiries” as contributing to its woes.

Silvergate’s FTX ties have placed the bank in hot water

The Justice Department is investigating Silvergate over potential fraud in relation to Sam Bankman-Fried’s (SBF) crumbled crypto exchange FTX and trading firm Alameda Research. The entities enjoyed deep ties — Alameda made Silvergate its primary bank in 2022. The firm instructed FTX customers to make deposits by wiring money to Alameda’s Silvergate account.

According to Silvergate, SBF’s failed firms accounted for less than 10% of the $11.9 billion in deposits from its crypto customers. But FTX’s bankruptcy and the subsequent freeze on customer funds triggered a bank run-like event.

• Silvergate’s customers withdrew 68% of all deposits held on behalf of the crypto industry.
• From September to December, the bank shed 52 digital asset customers.
• Silvergate Exchange Network loans using digital assets as collateral stood at $1.1 billion on December 31, 2022, down about $400 million from September 30, 2022. That likely indicates that some parties aggressively paid off loans to free up collateral.

Silvergate’s relationship with FTX and Alameda prompted probes by US senators Roger Marshall, Elizabeth Warren, and John Kennedy.

“Your bank’s involvement in the transfer of FTX customer funds to Alameda reveals what appears to be an egregious failure of your bank’s responsibility to monitor for and report suspicious financial activity carried out by its clients,” they wrote in a letter to Silvergate in December.

Firms continue to shed ties with tainted Silvergate

This week, crypto derivatives platform LedgerX told customers it would no longer use Silvergate to receive domestic wire transfers, effective Wednesday. Instead, the firm will use Signature Bank. Signature said in December that it was moving away from the digital asset sector, but not 100%.

Two weeks ago, billionaire George Soros’s family office Soros Fund Management disclosed it had bet against Silvergate. It held options on 100,000 Silvergate shares with a market value of $1.74 million in December 31, according to a regulatory filing. If Silvergate shares drop below an undisclosed threshold, the fund will make a tidy, though relatively small, profit.

Read more: Silvergate in crisis: Billions withdrawn, liquidations and losses mount

Silvergate laid off 40% of its staff in January 2023. Shortly after, Cathie Wood’s ARK Invest disclosed it sold $5 million in Silvergate stock.

As reported by Bloomberg at the time, almost 67% of available Silvergate shares are sold short. The bank’s announcement on Wednesday that it may soon go under has brought down the share price significantly — it could be that George Soros and other traders have already seen their bets pay off.

Silvergate shares are down 96% since reaching heights in November 2021, from $236 to $9.50 at press time.

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Billionaire Ken Griffin’s behemoth Citadel Securities has declared a 5.5% stake in Silvergate Capital worth around $25 million, according to a new filing with the Securities and Exchange Commission (SEC).

In a Form 13G, Citadel disclosed it bought up 1.6 million shares in the struggling crypto-friendly bank on December 31. Silvergate has suffered heavy losses since its largest customers, FTX and Alameda Research, went bankrupt and caused a bank-run that severely depleted Silvergate’s funds.

Griffin made quite an entrance into crypto last year by famously buying a rare copy of the US Constitution by outbidding CoinstitutionDAO. Before that, Griffin vehemently denounced crypto. In March, before the industry entered a bear market, he told Bloomberg:

“Crypto has been one of the great stories in finance over the course of the last 15 years. And I’ll be clear, I’ve been in the naysayer camp over that period of time.

“But the crypto market today has a market capitalization of about $2 trillion in round numbers, which tells you that I haven’t been right on this call.”

Of course, since then, crypto’s market cap has just about halved to one trillion dollars.

Citadel buys stake in struggling Silvergate

Financial service provider and bank Silvergate posted a loss of $949 million for the last quarter of 2022. It laid off 40% of its staff and announced it expected to lose $8.1 million in restructuring costs and severence packages.

During the same quarter, customers withdrew a whopping (and record-breaking) $8 billion from the bank. Its largest customers were now-bankrupt FTX and Alameda Research.

Read more: Short squeeze target Citadel wants to be a cryptocurrency market maker

Despite its heavy losses, Silvergate remains optimistic. In January, its chief exec Alane Lane said, ““While we are taking decisive actions to navigate the current environment, our mission has not changed. We believe in the digital asset industry.”

Silvergate’s stock price is down 87% year-to-date, from $121 to $15 at press time.

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Crypto-friendly bank and financial service provider Silvergate posted a loss of $949 million for the final three months of 2022. Massive losses in the past few weeks have forced the company to lay off 40% of its staff. It expects to part ways with $8.1 million in restructuring costs, such as severance packages.

Customers withdrew a record-breaking $8 billion from Silvergate during the quarter. The bank’s largest customers, FTX and Alameda Research, filed for bankruptcy protection in November. As Silvergate liquidated assets to satisfy an avalanche of customers’ withdrawal requests, the bank lost hundreds of millions of dollars by selling bonds and other illiquid securities prior to their intended maturities. Silvergate will also pay a $134 million impairment charge for securities that it plans to prematurely sell during the first quarter of 2023.

The heavy losses of Q4 2022 contrast starkly with its $76 million of net income during the same quarter of 2021. Indeed, it’s been a rough year for both Silvergate and its industry — Alameda Research made Silvergate its primary bank in 2022. Then, the firm instructed FTX customers to make deposits by wiring money to Alameda Research’s Silvergate account.

At the time of FTX’s bankruptcy filing, according to Silvergate, Sam Bankman-Fried’s now-bankrupt companies accounted for less than 10% of the $11.9 billion in deposits from Silvergate’s crypto industry customers. The bankruptcy and associated freezing of FTX customers’ funds triggered a bank run-type situation.

• The run included Silvergate’s customers withdrawing 68% of all deposits held on behalf of the crypto industry.
• From September 30, 2022 to December 31, 2022, Silvergate shed 52 digital asset customers.
• Silvergate Exchange Network loans using digital assets as collateral stood at $1.1 billion on December 31, 2022, down about $400 million from September 30, 2022. That likely indicates that some parties aggressively paid off loans to free up collateral.

Silvergate attempts positive PR spin

Beyond issuing its expected quarterly reports, Silvergate told Bloomberg that it prefers not to comment on customers and their activities. A spokesperson only mentioned that it’s a fully regulated bank with a proprietary approach to regulatory compliance.

Despite the generally poor year, Silvergate isn’t giving up on the digital asset industry.

“While we are taking decisive actions to navigate the current environment, our mission has not changed. We believe in the digital asset industry,” CEO Alan Lane reiterated in the most recent earnings announcement.

Read more: MicroStrategy and Silvergate are 2022’s most shorted crypto stocks

Senators not buying it

Critics find Lane’s resolve to be unconvincing. Silvergate currently faces an investor lawsuit alleging that the bank misled investors about its business practices and financial condition, which negatively impacted the stock price. The firm’s stock has plummeted by 90% in 2022 and dipped below $14 by January 17, 2023 — a catastrophic collapse from its November 2021 high of $239.29.

A group of senators spearheaded by Elizabeth Warren mailed letters to major firms with questions about FTX. The letters included one to Silvergate, inquiring why it failed to flag suspicious transactions involving the now-bankrupt exchange.

This inspired Lane’s claim that it takes regulatory compliance seriously in the firm’s post about its Q4 2022 financial results. He also repeated this claim in a letter responding to the Senators’ queries.

“Silvergate conducted significant due diligence on FTX and its related entities, including Alameda Research, both during the onboarding process and through ongoing monitoring,” Lane emphasized in his response.

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