Silvergate
Capital
settled
with
the
SEC
for
$50
million
as
Federal
Reserve
governors
and
California
financial
regulators
demanded
$63
million
in
fines
on
July
1.
The
SEC
claimed
Silvergate
Capital,
its
subsidiary
Silvergate
Bank,
and
two
executives
misled
investors
about
the
strength
of
its
BSA/AML
compliance
program
and
the
monitoring
of
crypto
customers,
including
the
exchange
FTX.
The
company’s
assurances
partially
aimed
to
refute
claims
that
FTX
used
Silvergate
accounts
to
carry
out
its
fraud. Silvergate’s
automated
monitoring
system
supposedly
failed
to
monitor
over
$1
trillion
of
customer
transactions
on
Silvergate
Exchange
Network
(SEN).
The
alleged
wrongdoing
took
place
between
November
2022
and
January
2023
The
SEC’s
settlement
also
imposes
a
$1
million
civil
penalty
on
former
Silvergate
CEO
Alan
Lane,
a
$250,000
civil
penalty
on
former
Silvergate
Chief
Risk
Officer
Kathleen
Fraher,
and
permanent
injunctions
on
the
companies
and
executives.
Lane
and
Fraher
additionally
agreed
to
five-year
officer-and-director
bars.
Silvergate,
Lane,
and
Fraher
settled
without
admitting
or
denying
the
SEC’s
allegations.
All
settlements
are
subject
to
court
approval.
The
SEC
also
alleged
Silvergate
and
its
former
CFO,
Antonio
Martino,
misled
investors
about
the
company’s
losses
from
expected
securities
sales
after
FTX’s
collapse.
The
SEC
charged
Martino,
who
has
not
yet
settled,
with
violations
of
federal
securities
laws.
Fed
and
California
DFPI
actions
The
Federal
Reserve
Board
of
Governors
and
the
California
Department
of
Financial
Protection
and
Innovation
(DFPI)
announced
parallel
actions
and
are
seeking
$63
million
in
fines.
The
parallel
actions
do
not
specifically
mention
Silvergate’s
involvement
with
FTX
but
refer
to
Silvergate’s
handling
of
crypto
and
monitoring
failures.
According
to
each
press
release,
Silvergate
can
offset
the
$50
million
it
owes
to
the
SEC
by
paying
the
amounts
in
the
Federal
Reserve
and
DFPI
actions.
Silvergate
shut
down
in
March
2023.
The
firm
submitted
an
SEC
filing
stating
that
it
faced
investigations
from
the
DOJ
and
intended
to
file
a
late
10-K
report,
preceding
a
drop
in
the
price
of
Silvergate
shares
and,
ultimately,
the
firm’s
collapse.
Mentioned
in
this
article
Go to Source
Author: Mike Dalton
