(Reuters) – The U.S. Securities and Exchange Commission (SEC) has sued cryptocurrency bank Silvergate Capital (OTC:) Corp in federal court for securities fraud, a court filing showed on Monday.
The Commission alleged that the company engaged in a “fraudulent scheme” to mislead investors about its banking secrecy and anti-money laundering compliance programs, as well as its “dire financial situation,” following the collapse of cryptocurrency exchange FTX in November 2022.
“The bank also failed to detect nearly $9 billion in suspicious transfers made by FTX and its related entities,” the SEC alleged.
Reuters could not independently verify the claims made to the SEC in court.
Silvergate did not immediately respond to a Reuters request for comment.
In March 2023, Silvergate, which ventured into the cryptocurrency sector in 2013, decided to shut down its operations and voluntarily liquidate itself following losses caused by the panic that occurred after the collapse of FTX.
The bank, founded in 1998, had disclosed that it sold additional debt securities in 2023 at a loss and that further losses meant the bank could be “less than well capitalised” before plans to close it came to light.
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