Silvergate Capital pays $63 Million to settle SEC ccharges of failing to monitor $1 trillion in transactions

Silvergate Capital Corp andits former CEO and its chief risk officer willl pay the SEC a total of $63 million to end charges they misled investors about the effectiveness of the Bank Secrecy Act and anti-money-laundering compliance program at its Silvergate Bank subsidiary, as well as its monitoring of cryptocurrency customers, which included the now-bankrupt FTX Trading Ltd.

The firm and the executives, which include former CEO Alan Lane and former Chief Risk Officer Kathleen Fraher, will pay the penalty as part of a settlement with the SEC, the California Department of Financial Protection and Innovation and the Federal Reserve Board. The SEC also charged former Chief Financial Officer Antonio Martino with violating certain anti-fraud and books-and-records provisions of federal securities laws, as well as with aiding and abetting Silvergate’s violations. Martino has not agreed to settle the regulator’s charges, according to the SEC. The SEC’s complaint says Silvergate, Lane and Fraher allegedly misled investors by stating that Silvergate had effective compliance programs and conducted ongoing monitoring of its high-risk crypto customers, including FTX, which imploded in late 2022.

The regulators also alleged Silvergate and Martino misrepresented the company’s “dire financial condition” during a liquidity crisis and bank run following FTX’s collapse. The complaint alleged that in an earnings release and earnings call,Silvergate and Martino intentionally understated the firm’s losses from expected security sales and falsely claimed that it remained well-capitalized.

Jeffrey Newman is a whistleblower lawyer, whose firm represents whistleblowers in healthcare fraud cases under the False Claims Act (FCA) and also under the Securities and Exchange, FINCEN and CFTC whistleblower programs. He can be reached at or at 617-823-3217