U.S. prosecutors are investigating California-based cryptocurrency bank Silvergate Capital Corp. for how it handled accounts tied to now-bankrupt crypto exchange FTX and its brokerage arm Alameda Research, Bloomberg reported on Thursday, citing sources familiar with the matter.

See related article: Silvergate reports US$1 billion loss, attributes to “crisis of confidence” in crypto sector

Fast facts

  • The Department of Justice’s fraud unit is investigating Silvergate’s dealings with the collapsed crypto companies, according to the Bloomberg report.
  • Silvergate has not been accused of any wrongdoing and the investigation is in its early stages, according to the report. Silvergate declined to comment, Bloomberg said.
  • Silvergate’s shares on the New York Stock Exchange fell 18% in after-hours trading on Thursday, erasing most of the 29% gain during the day.
  • The company posted a net loss of US$949 million for all of 2022, compared to a net income of US$75.5 million in 2021, according to its latest earnings report released last month.
  • In early January, Silvergate laid off 40% of its staff, or about 200 employees, after the collapse of FTX, it said in a filing to the U.S. Securities and Exchange Commission on Jan. 5.
  • Silvergate did not immediately respond to Forkast’s email request for comment.

See related article: Silvergate cuts 40% of staff after facing US$8.1B withdrawals in FTX collapse