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(Reuters) – The U.S. Securities and Exchange Commission has sued cryptocurrency-focused bank Silvergate Capital (OTC:) Corp in federal court for securities fraud, court filings showed on Monday.
The commission alleged that the company ran a “fraudulent scheme” to mislead investors about its bank secrecy and anti-money laundering compliance programs as well as its “dire financial condition,” following the collapse of cryptocurrency exchange FTX in November 2022.
The SEC alleged that “the bank also failed to detect approximately $9 billion in suspicious transfers by FTX and its associated entities.”
Reuters was unable to independently verify the allegations in the SEC filing.
Silverjet did not immediately respond to a Reuters request for comment.
In March 2023, Silvergate, which entered the crypto space in 2013, decided to voluntarily end its operations and liquidate after losses caused by the panic that followed the collapse of FTX.
The bank, founded in 1998, revealed that it sold additional debt securities in 2023 at a loss, and that further losses meant the bank could be “undercapitalized” before plans to close it emerged.
