US senators write to Silvergate Capital for answers on FTX collapse
Rebeca Moen Feb 01, 2023 09:25
Senators Elizabeth Warren, Roger Marshall, and John Kennedy stated Silvergate had not adequately addressed its improper management of FTX customer cash.
It has been reported that a number of senators from the United States have sent a letter to Silvergate Capital, which is the parent business of Silvergate Bank, in which they ask for explanations regarding the failure of the cryptocurrency exchange FTX.
According to a report that was published on the 31st of January by Bloomberg, several senators from the United States, including Elizabeth Warren, Roger Marshall, and John Kennedy, claimed that Silvergate did not answer all of their questions in response to a letter that was sent in December regarding the company's alleged role in handling FTX user funds. According to the reports, Silvergate cited limits on the disclosure of "secret supervisory information," which the senators deemed to be an unsatisfactory justification.
According to Bloomberg, the letter states that "Both Congress and the public need and deserve the information necessary to understand Silvergate's role in FTX's fraudulent collapse." This is especially true when considering the fact that Silvergate turned to the Federal Home Loan Bank in 2022 as its lender of last resort. "Both Congress and the public deserve the information necessary to understand Silvergate's role in FTX's fraudulent collapse."
The names of Warren, Marshall, and Kennedy were signed onto a letter dated 2022 that gave Silvergate until December 19 to present Congress with explanations about its role in the FTX scandal. However, according to reports, the senators said that the company had omitted critical information that was essential to evaluate Silvergate's participation in the alleged fraud committed by FTX. This included whether or not the company improperly managed the transfer of FTX customer assets to Alameda.
After the liquidity crisis and bankruptcy filing of FTX in November 2022 — and prior to the arrest of former CEO Sam Bankman-Fried — Senator Sheldon Whitehouse and Senator Elizabeth Warren called on the Justice Department to investigate the collapse of the cryptocurrency exchange and consider prosecuting certain individuals for their roles in the incident. In the most recent letter, Silvergate was given a deadline of February 13 to respond, during which time they were required to comment on the company's due diligence procedures.
After Republican lawmakers in the House of Representatives were unable to come to an agreement for days to elect the next speaker, which delayed committee assignments and legislation, members of Congress have begun organising for their 118th session. This comes after Republican lawmakers in the House of Representatives were unable to elect the next speaker. In December, lawmakers of the Senate and the House of Representatives held hearings to investigate what led to the collapse of FTX, and leadership indicated at the time that the probe would continue in 2023.
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