Crypto-focused bank Silvergate Capital is facing pressure from a bipartisan group of US Senators over its business ties to FTX and Alameda Research, Bloomberg has learned, citing a letter sent to the bank.
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In the document, the lawmakers, including Democrat Elizabeth Warren and Republicans Roger Marshall, laid out a series of questions addressing Silvergate's services related to the-now bankrupt crypto exchange.
The lawmakers also said the firm in December last year had declined to fully answer related questions over restrictions on disclosing "confidential supervisory information." The letter reads:
"Both Congress and the public need and deserve the information necessary to understand Silvergate's role in FTX's fraudulent collapse, particularly given the fact that Silvergate turned to the Federal Home Loan Bank as its lender of last resort in 2022."
Silvergate was one FTX's banking providers. According to reports, the California-based bank was processing some of the exchange's wire transfers to Alameda Research. The lawmakers now want to know if Silvergate knew that FTX was using clients' money to fund Alameda. Silvergate has to respond to the inquires before Feb. 13.
In Q4, Silvergate suffered a net loss of $1 billion due to a "transformational shift" in the industry. The bank added that "significant over-leverage in the industry" led to a "crisis of confidence," forecasting a sustained period of lower deposits in the future.
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