A bipartisan group of US senators featuring Democrat Elizabeth Warren and Republicans Roger Marshall and John Kennedy is putting pressure on cryptocurrency bank Silvergate Capital Corp over whether it knew about the alleged misuse of customer funds by collapsed crypto exchange FTX.
The group sent a letter to Silvergate chief executive Alan Lane enquiring into the company's ties to FTX after previous answers to a related inquiry were "evasive and incomplete", according to a Bloomberg report.
FTX’s founder and former head Sam Bankman-Fried is accused of siphoning users’ funds out of FTX and into sister company Alameda Research, with some of those funds potentially routed through accounts that Alameda had with Silvergate.
Silvergate was intrinsically linked to the formation of FTX, with Bankman-Fried once stating how the bank “revolutionised banking for blockchain companies”.
The bipartisan pressure wasn’t enough to hurt Silvergate’s share price, which actually saw a 4% overnight bump, likely buoyed by news that BlackRock recently increased its stake in the bank.
According to its latest Securities and Exchange Commission (SEC) filing, BlackRock, the world’s largest asset manager, increased its stake in the bank from 5.9% to 7.2% of free float, or 2,285,197 shares of Class-A common stock.
Silvergate has has a turbulent start to the year, marred by a dire fourth-quarter earnings call which exposed the extent of the bank’s exposure to the FTX scandal, and a 40% reduction in its headcount.
The senators gave Silvergate a deadline of February 13 to respond to the inquiries.