FTX case: a new element is added to the file!

As the crypto market struggles to gradually recover, one company in particular remains in the spotlight. We are obviously referring to FTX which is currently under investigation. As for its former CEO, Sam Bankman-Fried, his trial is going well. A new element is turning the FTX affair upside down: Silvergate’s relationship with the crypto company.

FTX case: the Ministry of Justice is interested in Silvergate

Silvergate inevitably linked to the FTX case?

Well known to investors and users, Silvergate is a California bank specializing in crypto transactions. It works with many crypto companies, like FTX. Silvergate hosts accounts linked to the fallen crypto giant. This explains why it finds itself today involved in the FTX affair.

On January 30, a group of senators addressed a letter at Silvergate. The main object: to find out whether the bank was aware of the misuse of FTX funds. In response to this question, a Silvergate representative said, “the company has a comprehensive compliance and risk management program and has performed significant due diligence on FTX and Alameda Research.”

Department of Justice investigation: what consequences for Silvergate?

The announcement of this new investigation in the context of the FTX affair puts Silvergate in a bad position. Some go so far as to say that not everything is as green as it seems in society. At the beginning of the year, it announced the dismissal of 200 employees. Added to this is a drop of more than 40% in its shares (less than 20% in prolonged trading).

Also in January 2023, Silvergate publishes its balance sheet for the fourth quarter of 2022. The results are catastrophic: a loss estimated at nearly $1 billion, against a net profit of $40.6 million.

As the FTX case continues, the findings are increasingly damning. At this time, prosecutors from the Justice Department’s Fraud Unit are only at the investigation stage. Silvergate is not yet under any charges. To be continued…

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