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- Silvergate has done business with more than a dozen crypto firms that have shut down, been fined, or come under investigation, Intelligencer reported.
- FTX’s Sam Bankman-Fried once sang the firm’s praises, saying that it’s “hard to overstate how much [Silvergate] revolutionized banking for blockchain companies.”
- Australian Ponzi criminal Stefan Qin previously set up a dozen accounts with Silvergate, Intelligencer reported.
Silvergate was once the go-to bank for the biggest names in crypto. Now, the industry favorite is under fire for ties to embattled crypto players and its role in the downfall of FTX.
The publicly traded bank has done business with more than a dozen crypto firms that have shut down, been fined, or come under investigation, according to an Intelligencer report on Tuesday.
This includes a slew of now bankrupt crypto firms like centralized lenders Celsius and BlockFi, along with digital asset brokerage Voyager Digital, according to court documents.
Silvergate also has worked with crypto exchange Binance’s US arm, which Reuters reported is under criminal investigation for money laundering and criminal sanctions violations.
The crypto-focused bank also had ties with TRON founder Justin Sun, who is being investigated for conspiracy to defraud the United States, according to The Verge, along with a laundry list of other allegations.
Stefan Qin, an Australian Ponzi artist who has been since charged with securities fraud, also set up a dozen accounts with Silvergate, according to the US Securities and Exchange Commission.
Silvergate did not immediately respond to Insider’s request for comment.
Meanwhile, Silvergate is also on blast for its ties to Sam Bankman-Fried and his once $32 billion crypto empire FTX.
In a now-deleted testimonial on Silvergate’s website, the disgraced crypto mogul said the following about the firm: “Life as a crypto firm can be divided up into before Silvergate and after Silvergate. It’s hard to overstate how much it revolutionized banking for blockchain companies.”
When FTX filed for bankruptcy on November 11, Silvergate said FTX represented less than 10% of deposits from all digital asset customers and that its relationship with FTX was limited to deposits.
FTX allegedly misused billion of dollars worth of the crypto exchange’s user deposits, moving customer money to Bankman-Fried’s sister trading firm Alameda Research for risky investments and other operational tasks.
Funds, which were intended for FTX, became deposits into a Silvergate account of North Dimension, an Alameda Research subsidiary, according to to the SEC. Essentially, FTX clients were told to wire funds to North Dimension, a seemingly fake online electronics retailer with a now-defunct website, in an effort to hide that the money was used for Alameda’s trading activities.
“We didn’t have any type of relationship with FTX, Alameda Research or any of the other entities other than the deposit relationship,” Silvergate CEO Alan Lane said on a conference call in November. Lane said Silvergate had “conducted extensive due diligence on FTX and Alameda Research.”
Last week, in another call with investors, the CEO declined to answer questions about FTX.
Elsewhere, elected officials have raised concerns about Silvergate’s role in the FTX fiasco. Senators Elizabeth Warren, John Kennedy, and Roger Marshall wrote a letter to Lane noting the bank’s failure to report “suspicious transactions” involving Silvergate and Bankman-Fried’s affiliated companies.