Cryptocurrency firm Silvergate fined $63M by US agencies

By Ovunc Kutlu

ISTANBUL (AA) - Cryptocurrency services provider Silvergate was fined a total of $63 million by US agencies amid anti-money laundering regulations.

"Silvergate Capital Corporation and Silvergate Bank were fined $43 million for deficiencies in its monitoring of transactions in compliance with anti-money laundering laws," the Federal Reserve said Monday in a statement.

The Department of Financial Protection and Innovation of the State of California, the state supervisor of Silvergate, also imposed a fine of $20 million.

The Securities and Exchange Commission (SEC) separately announced a penalty against Silvergate Capital Corporation.

The SEC said Monday it charged Silvergate Capital, former Chief Executive Officer (CEO), Chief Financial Officer and Chief Risk Officer (CRO) for misleading investors about compliance program, and the company’s losses from expected securities sales following the collapse of another crypto firm FTX.

"At all times, but especially during moments of crises, public companies and their officers must speak truthfully to the investing public," Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a separate statement.

Without admitting or denying the allegations, Silvergate agreed to a final judgment ordering it to pay a $50 million civil penalty and imposing a permanent injunction to settle the charges, according to the statement.

Former CEO Alan Lane and former CRO Kathleen Fraher also agreed to pay civil penalties of $1 million and $250,000, respectively.

As part of the 2023 banking crisis in the US, Silvergate Bank, which had significant exposure to cryptocurrencies, abruptly failed in early 2023, after a sharp decline in crypto prices and the collapse of FTX in late 2022.