Silvergate Bank, Known for Crypto Support, Reaches $63M Settlement with Regulators

Silvergate Capital Corp., the parent company of crypto-friendly Silvergate Bank, has settled for $63 million with U.S. and California regulators over accusations of management failings and misleading investor disclosures. The U.S. SEC sued Silvergate, its former CEO Alan Lane, former COO Kathleen Fraher, and former CFO Antonio Martino, alleging the bank misrepresented its anti-money laundering program's effectiveness. The Federal Reserve and California’s DFPI also brought charges.

Under the settlement, Silvergate, Lane, and Fraher did not admit or deny the allegations but agreed to pay penalties. Lane and Fraher face a five-year ban from serving as officers or directors of public companies. Silvergate will pay $43 million to the Fed and $20 million to DFPI for internal monitoring deficiencies. The SEC's $50 million fine will be offset by payments to banking regulators. Martino denied the allegations, citing a specific quarter in 2022 and judgment-driven decisions. The SEC highlighted Silvergate's failure to detect $9 billion in suspicious transfers by FTX.

Silvergate’s spokesperson noted that the settlements are part of the bank’s orderly wind-down, which began in early 2023. Silvergate's closure amidst sector challenges underscores ongoing scrutiny and compliance issues for financial institutions involved with digital assets.