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