Silvergate Bank Stock Plunges After Report of DOJ Investigation into Ties with FTX and Alameda
Shares of Silvergate have seen a sharp drop in pre-market trading following the news that US officials have launched a probe into the crypto bank's dealings with fallen crypto giants FTX and Alameda Research.
According to a recent report by Bloomberg, the US Department of Justice is looking into Silvergate's relationship with now-defunct cryptocurrency exchange FTX and its trading arm Alameda Research, which includes examining the bank's hosting of accounts tied to Sam Bankman-Fried’s businesses.
The crypto-friendly bank hasn’t been accused of any wrongdoing and the inquiry, which is in its early phases, could end without charges being brought, Bloomberg reported, citing people familiar with the matter.
Following the news, Silvergate shares took a nosedive, plunging by as much as 10% in the pre-market trading. Notably, the company's shares lost roughly 88% of their value in 2022 amid the broader crypto market downturn that saw around $2 trillion wiped out of the market.
The investigation, which started a few weeks ago, is reportedly centered around one key question: "What did banks and intermediaries working with Bankman-Fried’s firms know about what US officials have called a years-long scheme to defraud investors and customers?"
Sam Bankman-Fried, the disgraced founder of FTX, has been charged with eight criminal charges including wire fraud and conspiracy to misuse customer funds. The disgraced crypto boss pleaded not guilty to all charges last month.
Silvergate was among the lenders hit hardest by the fall of FTX in November last year. As reported, Silvergate suffered a bank run following the collapse of FTX and had to sell $5.2 billion of debt securities it was holding on its balance sheet at a significant loss to
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