US supervisory authorities initiate official investigation into Silvergate-ftx businesses
US supervisory authorities initiate official investigation into Silvergate-ftx businesses
Silvergate, one of many creditors who had to accept enormous losses due to the bankruptcy of FTX, was previously forced to release 40 % of his employees.
This business burglar was reinforced by considerable loans in billions of billions to cover a possible bank run that the organization feared after the collapse of FTX.
Silvergate on the hot chair
Although loans in the amount of several billion dollars may appear for the course typical banks, the electricity recorded by Silvergate is said to be largely on most of its current barres reserves.
"Your Bank" now holds around $ 4.6 billion in cash ", the vast majority - $ 4.3 billion - she has secured the FHLB as an advance. By using the FHLB as a functional "Lender of Last Resort", Silvergate has further introduced the crypto market risk into the traditional banking system. "
The bank's balance sheet also looks worse after she suffered a loss of $ 1 billion in the past quarter-and a 20 percent decrease in the share price during the extended trading hours on Thursday.
no official accusations
Although the current investigation of the FTX Group's business with Silvergate is in official function this time, no accusations have yet been made.
Instead, the current investigation, which is coordinated by the US Ministry of Justice, aims to uncover how much the management of Silvergate actually knew about FTX's business. Especially if they suspected that financial misconduct was carried out by bank accounts held by Silvergate, which would have obliged the bank to report the exchange to the authorities.should it turn out that the alternative answers from Silvergate are only typical banking secrecy, the examination will probably be completed, even if more information about the bank strategies of FTX.
For the time being, Silvergate has confirmed that for every company in the FTX group it was connected to it, it was done by the onboarding of Alameda Research in 2018. Apart from internal audits, it is also worth mentioning that Silvergate reported a good reputation for very compliant with the Federal Reserve as well as independent auditors checked.
These audits may not be strict enough. Apart from the investigation of the Doj, Silvergate also faces a possible crowd of other investors who reported that the bank accused their financial controls and exams.
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