Silvergate Capital's responses to lawmakers on FTX ties 'evasive and incomplete'

Silvergate Capital's ( NYSE: SI ) responses to a December 2022 inquiry on what knowledge the cryptocurrency-focused bank had about crypto exchange FTX's ( FTT-USD ) alleged misuse of customer funds were "evasive and incomplete," a bipartisan group of U.S. senators wrote in a letter earlier this week. Former high-level executives of FTX, including onetime billionaire and ex-CEO Sam Bankman-Fried, have been accused of defrauding investors and customers through the improper transfer of billions of dollars of FTX customer funds to crypto hedge fund Alameda Research (FTX's affiliated trading desk). A portion of those funds were reportedly transferred via accounts Alameda had at Silvergate ( SI ). In the letter, senators Elizabeth Warren (D-MA), Roger Marshall (R-KS) and John Kennedy (R-LA) asked Silvergate ( SI ) about its ties to the failed trading platform, saying “both Congress and the public need and deserve the information necessary to understand Silvergate’s role in FTX’s fraudulent collapse, particularly given the fact that Silvergate turned to the Federal Home Loan Bank as its lender of last resort in 2022.” In the beginning of January, Silvergate disclosed holding $4.3B of short-term FHLB advances as of Dec. 31, 2022. That funding, in addition to the ~$4.6B it had in cash and cash equivalents at the end of 2022, helped the bank to avert a run on deposits after FTX's downfall in November 2022. The lawmakers said the bank in December had refused to fully answer requested information, citing “confidential supervisory information.” "This is simply not an acceptable rationale," the senators wrote . "It is crucial that you provide Congress with the information needed to assess the extent to which Silvergate is responsible for the improper transfer of FTX customer funds to Alameda, and to determine the nature of the compliance failures by your bank and your auditors that could have allowed for such abuses." Silvergate ( SI ) stock gained 3.9% in Tuesday morning trading. Last week, (Jan. 27) SI tanked after suspending the payment of dividends on a series of preferred stock to hold onto cash.