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Silvergate's FTX dealings face fraud investigation

Silvergate's FTX dealings face fraud investigation

US Justice Department fraud prosecutors are investigating crypto-focussed bank Silvergate's dealings with FTX and Alameda Research, according to Bloomberg.

The Justice Department's fraud unit has begun a criminal investigation into Silvergate's hosting of accounts relating to the businesses, which collapsed spectacularly late last year.

The probe is in its early stages and Silvergate has not been accused of wrongdoing, says Bloomberg, citing sources. Nevertheless, its share fell more than 20% on the news Thursday before recovering.

The FTX bankruptcy has hit Silvergate hard; the bank held deposits for FTX businesses and Almeda Research. When the exchange collapsed, the bank's customers withdrew more than $8 billion in digital asset deposits.

Silvergate was forced to sell $5.2 billion in assets at a loss to cover the cost and remain liquid - leading to a $1 billion loss for the fourth quarter. It has also laid off 200 people - 40% if its staff.

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