Silvergate, a cryptocurrency bank, has been accused of contributing to the failure of FTX, leading to speculation and even litigation. Alan Lane, CEO of Silvergate, took things into his own hands and wrote a public statement to reassure shareholders about the company's course of action.
Silvergate's CEO writes in a letter that the company followed all of the regulations and procedures for risk management and conducted comprehensive due diligence on FTX and its affiliates, including Alameda Research, before allowing them to join the Silvergate family.
A class action complaint claims that Silvergate and its corporate officials are liable for fraudulent damages caused by the failure of FTX because they either deliberately or carelessly allowed FTX to redirect customer money to Alameda Research.
The CEO of Silvergate pointed out that many rumors and speculative materials have been spread by short sellers and other opportunists attempting to benefit from market turbulence.
According to Alan Lane, the company has a strong financial foundation and plenty of cash on hand. Lane said that the organization gives great attention to risk management and regulatory compliance. Each account's transaction history is monitored by Silvergate, and any unusual behavior is apparently flagged.
When they become aware of questionable business operations, they file suspicious activity reports as required by law. According to the letter, the corporation routinely deletes accounts that are found to have been used fraudulently. The CEO of Silvergate has remarked that the company plays a crucial role in assisting law enforcement in identifying criminal actors by carrying out our risk management processes and meeting their regulatory requirements. They recognize the significance of this duty and act accordingly.
Morgan Stanley, citing the fallout from FTX's collapse, lowered Silvergate shares from equal weight to underweight in a research note. Analysts claim that Silvergate's digital deposits have dropped 60% so far in the fourth quarter, compared to the third. Customers' withdrawals put pressure on the bank's net interest margins and net interest income.
Silvergate said last month that they had had very little contact with BlockFi. Additionally, Silvergate made it very apparent that BlockFi was not a custodian for its bitcoin-collateralized leverage loans and that neither company had any financial stake in BlockFi.
