• The US Department of Justice has launched an investigation into Silvergate Capital Corp. for its dealings with bankrupt crypto firm FTX and Alameda Research.
• As a result, the bank has faced significant losses and its stock price has plummeted.
• It is currently facing scrutiny from government bodies and policymakers, and criminal charges could be brought against it.

Department of Justice Launches Probe Into Silvergate Capital

The United States Department of Justice has launched a probe into Silvergate Capital Corp. and its dealings with bankrupt crypto firm FTX and its sister concern Alameda Research. Prosecutors are investigating the company’s operations, specifically in regards to the FTX debacle of 2022, which resulted in major losses for the bank.

FTX Debacle Has Caused Major Losses for Silvergate

After the collapse of FTX, over two-thirds of Silvergate’s customers withdrew deposits totaling $8 billion, resulting in a net loss of $1 billion for the bank in the fourth quarter of 2022. This has caused share prices to drop 88% by 2022 and 40% premarket trading, prompting layoffs at the company to mitigate losses incurred by it.

Increasing Scrutiny From Government Bodies & Policymakers

Silvergate Bank is now facing increasing scrutiny from government bodies and policymakers due to their involvement with FTX as well as other businesses associated with FTX founder Sam Bankman-Fried. A bipartisan group of United States Senators have requested details on risk management practices related to Silvergate’s dealings with FTX and Alameda Research, while federal prosecutors in the DoJ’s fraud section are conducting a criminal probe into these activities.

Anti-Crypto Sentiments Pose Threat Of Criminal Charges Against Silvergate

The anti-crypto sentiment among many U.S government departments poses a threat that criminal charges could be brought against Silvergate if found guilty during investigations into their operations or dealings with FTX/Alameda Research. Although no charges have been brought against them yet, this eventuality is possible due to current climate regarding cryptocurrencies within US authorities .

Background On Silvergate And Its Move Into Crypto Markets

Silvergate was formerly small US organization until it went public November 2019 when it entered cryptomarkets becoming significant feature as bank providing services to crypto companies turned down by traditional banking service providers prior to collapse of FTX ecosystem which had major implications on certain firms within TradFi sector particularly those connected to Sam Bankman-Fried through accounts held by them at SilverGate

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