The SEC said Silvergate Capital agreed to pay a $50 million civil penalty over alleged failures to monitor transactions on its Silvergate Exchange Network (SEN) and misleading statements about its compliance program and financial condition. Silvergate settled without admitting or denying the allegations; the $1 trillion figure refers to transactions the SEC said were not adequately monitored, not a loss or a fine.
What did the SEC accuse Silvergate of?
On July 1, 2024, the Securities and Exchange Commission announced charges against Silvergate Capital Corporation, former CEO Alan Lane, and former chief risk officer Kathleen Fraher concerning statements about the bank’s Bank Secrecy Act/anti-money-laundering program and its monitoring of crypto customers, including FTX. The SEC also charged Silvergate and former CFO Antonio Martino with misleading investors about expected losses from securities sales and the company’s financial condition after FTX’s collapse. The allegations are described in the SEC’s announcement and its litigation release.
The SEN monitoring allegations
SEN was Silvergate Bank’s payments platform for customers. The SEC said Silvergate’s automated monitoring system failed to monitor more than $1 trillion in customer transactions on the network. In the complaint, the SEC more specifically alleged that approximately $1 trillion in transactions were not adequately or automatically monitored for suspicious activity. Those are allegations about the volume of transactions and the quality of monitoring—not a finding that $1 trillion was lost or that every transaction was suspicious. The SEC complaint sets out the underlying allegations.
The SEC further alleged that Silvergate failed to detect nearly $9 billion in suspicious transfers by FTX and related entities. That figure, too, is an allegation attributed to the SEC, not an adjudicated finding.
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The statements to investors
The SEC alleged that from November 2022 through January 2023, Silvergate, Lane, and Fraher represented that the bank had an effective BSA/AML program and monitored high-risk crypto customers. According to the SEC, some statements were made to rebut public speculation about FTX’s use of Silvergate accounts. Separately, the complaint alleged that Silvergate and Martino understated expected losses from securities sales and misrepresented that the company remained well-capitalized as of December 31, 2022.
Did Silvergate admit wrongdoing?
No. The SEC said Silvergate settled “without admitting or denying the allegations.” That settlement language does not amount to an admission that the alleged monitoring or disclosure failures occurred, and the SEC announcement does not report a court finding on those allegations.
Gurbir S. Grewal, then director of the SEC’s Division of Enforcement, said: “At all times, but especially during moments of crises, public companies and their officers must speak truthfully to the investing public.”
What were the settlement terms?
The SEC announced the following terms on July 1, 2024. It said the settlements were subject to court approval.
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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problems| Party | Announced terms | Admission and case status in the announcement |
|---|---|---|
| Silvergate Capital | $50 million civil penalty and a permanent injunction | Settled without admitting or denying the allegations; subject to court approval |
| Alan Lane | $1 million civil penalty, permanent injunction, and five-year officer-and-director bar | Settled without admitting or denying the allegations; subject to court approval |
| Kathleen Fraher | $250,000 civil penalty, permanent injunction, and five-year officer-and-director bar | Settled without admitting or denying the allegations; subject to court approval |
| Antonio Martino | No settlement terms reported in the cited announcement | Charged by the SEC; the cited announcement and litigation release do not report a settlement |
The SEC said Silvergate’s payment could be offset by penalties paid to the Federal Reserve Board and/or California’s Department of Financial Protection and Innovation. The announcement did not specify whether an offset occurred or its amount.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is established about the case’s later status?
The SEC’s July 1, 2024 announcement said the Silvergate, Lane, and Fraher settlements were subject to court approval. The cited SEC materials do not establish whether approval followed, whether any penalty offset was applied, or the current outcome of the SEC’s case against Martino. No later procedural status should be inferred from the announcement alone.
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