ISTANBUL – Silvergate, a prominent cryptocurrency services provider, has been hit with fines totaling $63 million by US regulatory agencies due to lapses in anti-money laundering (AML) compliance.
On Monday, the Federal Reserve announced that Silvergate Capital Corporation and Silvergate Bank were fined $43 million for inadequate transaction monitoring under AML laws.
Additionally, the California Department of Financial Protection and Innovation, Silvergate’s state supervisor, imposed a separate $20 million fine.
The Securities and Exchange Commission (SEC) also announced penalties against Silvergate Capital Corporation, its former Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Risk Officer (CRO). The SEC accused the company of misleading investors about its compliance programs and financial losses linked to expected securities sales following the collapse of the crypto firm FTX.
“Public companies and their officers must always be truthful with investors, especially during crises,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement, in a statement.
Without admitting or denying the allegations, Silvergate agreed to a final judgment, including a $50 million civil penalty and a permanent injunction to settle the charges. Former CEO Alan Lane and former CRO Kathleen Fraher also agreed to pay civil penalties of $1 million and $250,000, respectively.
Silvergate Bank, which had substantial exposure to cryptocurrencies, collapsed in early 2023 following a sharp decline in crypto prices and the FTX collapse in late 2022, contributing to the 2023 US banking crisis.
