SEC: Silvergate Bank Settles for $50M, Admits Lapses in Monitoring $1 Trillion Transactions

The SEC's crackdown against Silvergate Bank has resulted in a $50 million settlement agreement from the company against the charges filed against it by the regulators. Silvergate also admitted that it did not monitor as much as $1 trillion in cryptocurrency transactions during its operations, with the company known to have ties with the Sam Bankman-Fried-led FTX.

Not only that, FTX is one of Silvergate's largest customers in its run, with the renowned crypto exchange's bankruptcy being one of the main reasons for Silvergate's running aground as well.

SEC: Silvergate Bank Settles For $50 Million Alongside Executives

The latest press release from the SEC stated that Silvergate has agreed to settle its case for a $50 million civil penalty after being served with charges including defrauding investors and misleading them about the FTX downfall. The regulatory agency claimed that the company settled without admitting or denying the charges filed against it.

The SEC also charged its executives, including Chief Executive Officer Alan Lane and Chief Risk Officer Kathleen Fraher, regarding its anti-money laundering compliance amidst the FTX fiasco.

The Commission also reports that both executives have agreed to settle their cases and paid civil penalties of $1 million and $250,000, respectively.

Silvergate Admits to Not Monitoring $1T in Crypto Transactions

The SEC reiterated that Silvergate, Lane, and Fraher misled investors about their anti-money laundering compliance program, to which the company failed to monitor as much as $1 trillion in cryptocurrency transactions on its Silvergate Exchange Network platform.

The SEC also revealed that FTX was able to use its accounts at Silvergate to continue its "misconduct" and fraudulent transactions.

Silvergate's Collapse and the SEC's Crypto Crackdown

In early 2023, it was known that Silvergate Capital Corporation, the parent company of Silvergate Bank, claimed that it would close its bank, also leading to its voluntary liquidation amidst the massive crackdown. Silvergate is known for having massive ties to FTX, and when it declared bankruptcy, a domino effect took place, also taking down the bank.

The SEC's crackdown on crypto began with FTX, once the world's largest crypto exchange managed and led by Sam Bankman-Fried. This led to a lengthy trial procedure in which Bankman-Fried tried to prove his innocence, but ultimately, he was found guilty of the fraud charges against him and later sentenced to 25 years in prison.

This domino effect in the crypto and related industries also saw the SEC go against Binance, the next-largest crypto exchange platform, which led to a massive settlement and another executive's imprisonment.

Now, Silvergate Bank's case ended with a settlement. The bank did not confirm or deny any of the charges but admitted to its shortcomings regarding the crypto transactions that took place under its watch.