Crypto-Friendly Silvergate Bank Settles Regulatory Charges with $63M Agreement
Silvergate Capital Corp., the parent company of Silvergate Bank known for its crypto-friendly stance, has agreed to a $63 million settlement with U.S. and California regulators.
The settlement resolves accusations of internal management failings and misleading disclosures to investors.
The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Silvergate Capital Corp., its former CEO Alan Lane, former COO Kathleen Fraher, and former CFO Antonio Martino. The SEC alleged that the bank misrepresented the effectiveness of its Bank Secrecy Act/anti-money laundering program. The Federal Reserve and California’s Department of Financial Protection and Innovation (DFPI) also brought charges against the La Jolla, California-based bank.
Under the settlement, Silvergate, Lane, and Fraher neither admit nor deny the SEC’s allegations but agreed to pay penalties. Lane and Fraher will face a five-year ban on serving as officers or directors of a public company. Additionally, Silvergate will pay $43 million to the Fed and $20 million to DFPI, addressing deficiencies in internal transaction monitoring. The SEC imposed a $50 million fine, subject to offset by payments to banking regulators.
Former CFO Antonio Martino denied the allegations, stating they related to a specific quarter in 2022 and involved judgment-driven decisions. The SEC’s complaint highlighted that Silvergate failed to detect nearly $9 billion in suspicious transfers by major customer FTX.
Silvergate’s spokesperson emphasized that the settlements are part of the bank’s orderly wind-down process initiated in early 2023, independent of government assistance. Once a key partner for crypto businesses, Silvergate’s closure amid sector challenges marked a significant event in the financial industry.
The regulatory actions against Silvergate highlight ongoing scrutiny and compliance challenges facing financial institutions engaged with digital assets.
