SEC sues Silvergate for misleading statements following FTX collapse – DiarioBitcoin

According to the complaint, SEC, Silvergate would have incurred in misleading statements and the lack of application of controls for the monitoring of operations, which resulted in more than USD $1 billion in capital movements without the proper controls.

***

• SEC took action against Silvergate Bank
• Silvergate and several executives made false statements, and endorsed capital movements without proper supervision.
• The agency also reported that it reached agreements with Silvergate and two of the directors named
• The proceedings against Silvergate add to the growing list of actions taken by the SEC against crypto companies

Silvergate Bankthe California-based bank focused on digital currencies that closed its doors in 2023 after liquidating its assets, was hit with a lawsuit by the U.S. Securities and Exchange Commission (SEC), This is due to alleged transfers with the old exchange FTX, as well as false statements to the public about its procedures and due diligence.

Charges against Silvergate Bank

According to a document submitted by the SEC, reviewed by the media The Block, Silvergate would have incurred violations applicable to the Bank Secrecy Actas well as in violations of the Anti-Money Laundering RegulationsThey accuse the entity of not implementing the necessary measures to supervise the operations of its users, allowing the transfer of funds without any type of control to avoid illegal acts.

In this regard, in the document presented by the SEC it reads:

But the bank failed to adequately or automatically monitor suspicious activity on approximately $1 trillion in banking transactions that occurred at SEN. The bank also failed to detect nearly $9 billion in suspicious transfers from FTX and its related entities.

In the lawsuit, the SEC He also held the former CEO of the company, Alan Lane, as well as the former director of operations, Kathleen Fraher, and the former financial director, Antonio Martino, directly responsible for these practices.

According to the agency, the bank launched one of its main products in 2017, SEN, which allowed companies and users to make capital movements almost immediately, all for commercial operations with cryptocurrencies. However, both Lane and Fraher would have discovered that Silvergate failed to ensure proper compliance measures, and even failed to properly supervise operations between 2021 and 2022.

As reported by the SEC, Silvergate lied to users and regulators by claiming that transactions via SEN They complied with due process, allowing the movement of more than USD $1 billion without the controls and care that should be applied to avoid financial crimes, with a good part of the funds related to FTX, bankrupt exchange that collapsed after a complex scheme of embezzlement was revealed.

Reaching an agreement with the SEC

In addition to demand, the SEC He revealed that he had reached agreements and compensations with several of the parties named in the published document.

According to reports The Block, so much Silvergate as Lane and Fraher would have reached an agreement with the SEC, although they neither admitted nor denied the charges brought by the agency.

This means that Lane and Fraher will pay USD $1 million and USD $250,000, respectively, while Silvergate will pay $50 million in fines. The aforementioned executives agreed to permanent injunctions.

On Martino’s part, he did not accept an agreement with the SEC, so due process will continue and the dispute will possibly be resolved in court.

The announcement by the SEC It joins the long list of procedures and compliance measures that it has undertaken in recent times, especially highlighting the fight in courts against Coinbase and Binance for violations of federal securities laws.

Beyond this, the SEC shipment Wells Notices to Kraken, Uniswap, Consensys and Robin Hood, in which he accused them of trading in unregistered securities.

Article by Angel Di Matteo / Bitcoin Diary

Picture of DiarioBitcoin, free to use, under public domain license

WARNING: This is an informative article. DiarioBitcoin is a media outlet, it does not promote, endorse or recommend any particular investment. It is worth noting that investments in cryptoassets are not regulated in some countries. They may not be appropriate for retail investors, as the total amount invested could be lost. Check the laws of your country before investing.