Silvergate settles SEC lawsuit for $50 million; Fed, California regulator demand $63 million fine
Silvergate Capital settled with the SEC for $50 million and faces demands for $63 million in fines from the Federal Reserve governors and California financial regulators. The SEC alleged that Silvergate misled investors about its compliance program and monitoring of crypto customers, including FTX. The company's automated monitoring system supposedly failed to monitor over $1 trillion of customer transactions. Former CEO Alan Lane and former Chief Risk Officer Kathleen Fraher agreed to settlements with civil penalties and officer-and-director bars. The SEC also alleged that Silvergate's former CFO, Antonio Martino, misled investors about the company's losses from expected securities sales after FTX's collapse. The Federal Reserve Board of Governors and the California Department of Financial Protection and Innovation announced parallel actions seeking $63 million in fines. Silvergate can offset the $50 million owed to the SEC by paying the amounts in the Federal Reserve and DFPI actions. Silvergate shut down in March 2023, facing investigations from the DOJ and intending to file a late 10-K report.
