According to a recent report, the DOJ is currently probing Silvergate’s association with FTX and Alameda Research. It should be noted that Silvergate wasn’t accused of fraud or any other misconduct yet. The investigation primarily focuses on the accounts that SBF, FTX, and Alameda were handling.
This isn’t the first time that the cryptocurrency bank was being questioned about its ties with FTX. A bipartisan group of senators previously called out the bank for its “egregious failure” on the bankrupt exchange. The senators reported how Silvergate facilitated transfers of FTX’s customer funds to Alameda Research.
Silvergate stocks plummet amidst probe
This news had a direct impact on the shares of Silvergate. The stock price dropped by 28% to a low of $14.68 during the after-hours trading. At press time, Silvergate’s shares were priced at $17.14 with an 18.26% plummet. SI prices are currently 92% below its all-time high of $220 which it achieved back in November 2021.
It should be noted that just like the wider market, Silvergate endured losses of over $1 billion in the last quarter. In addition, 40% of its staff was also laid off. Silvergate also took out loans worth billions of dollars to avoid a liquidity crisis instilled by FTX. More recently, the bank also suspended its dividend in light of the volatility around the cryptocurrency market.
Several believe that the latest probe instigated by DOJ could prompt more loss and impact the overall market as well. This implies that firms tied to Silvergate could be affected.