SEC sues Silvergate parent and execs over Bank Secrecy Act violations
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Annelise Capossela/Axios
The parent company of now-defunct crypto bank Silvergate has agreed to pay $63 million to settle a lawsuit from the Securities and Exchange Commission and accusations brought by the Federal Reserve Board and California regulators against the bank and former executives.
Why it matters: The SEC's suit has to do with some $1 trillion in banking transactions that occurred in 2021 and 2022, during which time Silvergate allegedly knowingly violated the Bank Secrecy Act and anti-money laundering rules.
- The complaint names then-chief Alan Lane, former chief financial officer Tony Martino, and former chief risk officer Kate Fraher.
- It also blames the bank for failing to detect $9 billion in suspicious FTX transfers, the filing shows.
State of play: All parties charged, aside from Martino, have agreed to settle the SEC's charges.
- Silvergate also agreed to pay a combined $63 million to the Federal Reserve Board and California's Department of Financial Protection and Innovation (DFPI) to settle accusations deficiencies in the bank's internal transaction monitoring.
- A $50 million penalty assessed by the SEC will be offset by Silvergate's payments to the DFPI and the Federal Reserve Board.
Zoom in: Allegedly, Silvergate Capital, Lane and Fraher misrepresented that its compliance program was "tailored to the heightened risks posed by its crypto asset customers."
- The complaint also said CFO Martino "engaged in a fraudulent scheme to mislead investors about the Bank's dire financial condition."
- Martino said he "categorically denies" the allegations in a statement emailed to Axios.
- Lane and Fraher couldn't be reached for comment. Both former executives, as well as Silvergate, settled the charges against the SEC without admitting or denying the allegations.
Flashback: Silvergate imploded after FTX's collapse, and was liquidated in March 2023.
How it work(ed): SEN enabled transfer of U.S. dollars between it and the banks' customers — a 24/7 settlement service that counted major crypto firms including Binance US, Kraken, Gemini and FTX as clients.
- It didn't settle crypto, but allowed institutions to transfer fiat between crypto exchanges and other firms.
Editor's note: This story was updated to include additional details about the settlements.
