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Seeking Alpha 2022-12-06 20:18:53

Silvgerate stock extends fall as U.S. lawmakers demand clarity about FTX links

Silvergate Capital ( NYSE: SI ) stock retreated 5.4% in Tuesday afternoon trading as Senators Elizabeth Warren (D-MA), John Kennedy (R-LA) and Roger Marshall (R-KS) sent a letter to Alan Lane, the digital asset-focused bank's CEO, requesting clarity about its relationship with Sam Bankman-Fried's crypto empire. The letter was in response to "new and disturbing allegations about the company’s business practices," the state senators wrote. They raised concerns specifically regarding Sivergate's ( SI ) role in “facilitating the improper transfer of FTX customer funds to Alameda.” Media reports last week highlighted that some FTX ( FTT-USD ) customers were directed to send wire transfers through Alameda, FTX's affiliated trading firm, which was allowed to have accounts at Silvergate. That being said, FTX was said to have used more than half of its customer funds to fund risky bets . “This arrangement between FTX and Alameda relied on Silvergate’s depository services, and Alameda’s depository account with Silvergate appears to be at the center of improper transfers of customer funds,” the senators noted. SI has until December 19 to respond to the letter. In the wake of Silvergate's ( SI ) ties with FTX, investors have dumped their SI shares. Since FTX and its over 130 affiliates filed for bankruptcy protection on November 11, SI stock has plunged around 30% , and -86% year-over-year. Earlier this week, (Dec. 5) Lane assured investors that the bank has ample liquidity as well as a resilient balance sheet. Dear readers : We recognize that politics often intersects with the financial news of the day, so we invite you to click here to click here to join the separate political discussion .

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