A criminal inquiry into Silvergate’s hosting of accounts for FTX, which dramatically failed late last year, has been launched by the Justice Department’s fraud branch.
Silvergate has not been charged with any misconduct at this point in the investigation, according to Bloomberg, who cited sources. On Thursday, however, after the announcement, its share plunged more than 20% before rising.
Silvergate has been severely impacted by the FTX bankruptcy as the bank held deposits for FTX companies as well as Almeda Research. Customers withdrew more than $8 billion in deposits of digital assets from the bank after the exchange failed.
In order to meet the costs and maintain liquidity, Silvergate was obliged to sell $5.2 billion in assets at a loss, which resulted in a $1 billion loss for the fourth quarter. Additionally, 200 workers were let go, or 40% of the workforce.