SEC Sues Silvergate Capital Over AML Failures, Securities Fraud; $63M Settlement Reached

Jul 1, 2024, 08:29 PM

The U.S. Securities and Exchange Commission (SEC) has sued Silvergate Bank's parent company, Silvergate Capital, and its former executives, alleging they misled the public about the effectiveness of its anti-money laundering (AML) and Bank Secrecy Act (BSA) protections. The SEC claims that Silvergate did not adequately monitor $1 trillion in crypto transactions and made false statements regarding its AML procedures. The lawsuit also names Silvergate's former CEO and former CFO Antonio Martino, accusing them of misleading investors about the company’s losses from expected securities sales following the collapse of FTX. Silvergate Capital has agreed to settle the charges with the SEC, the Federal Reserve, and California's financial regulator, agreeing to pay up to $63 million, including a $50 million civil penalty. The SEC also alleges securities fraud, which some believe is partially performative given Silvergate's current state.