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Silvergate has agreed to pay $63 million to settle allegations of mismanagement and misleading investors from US regulators including the Securities and Exchange Commission (SEC).
The crypto-friendly bank will pay $20 million to the Department of Financial Protection and Innovation (DFPI) and $43 million to the Federal Reserve. $50 million in penalties assessed by the SEC will be offset by Silvergate’s payments to the Federal Reserve and the DFPI.
On Monday, the SEC sued Silvergate Capital, the parent of Silvergate Bank, former CEO Alan Lane and former COO Kathleen Fraher for misleading shareholders. Former CFO Antonio Martino was accused of misleading investors about the bank's losses.
Additionally, the Federal Reserve and California regulator announced that they had identified shortcomings in Silvergate's transaction monitoring related to compliance with anti-money laundering laws.
Lane and Fraher agreed to permanent injunctions, five-year bans from serving as officers or directors, and civil penalties of $1 million and $250,000, respectively.
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"Antonio Martino categorically denies the U.S. Securities and Exchange Commission’s allegations against him, and Mr. Martino will vigorously defend himself in court where he is confident the SEC’s over-reach and mischaracterization of the facts will be clear," Martino's lawyer said in a statement.
In March 2023, Silvergate said it would wind down operations after being hit with losses due to exposure to FTX. Like Silicon Valley Bank, Silvergate sold debt securities at a loss and experienced a bank run of $8 billion.
Ashrith Rao
"The settlements announced today, which will facilitate the surrender of Silvergate’s bank charter, are part of the Bank’s continued orderly wind down and successfully conclude investigations by the Federal Reserve, DFPI, and SEC," a Silvergate spokesperson said.
