United States SEC Fines Silvergate Capital, ex-CEO & Chief Risk Officer $51.25 Million for Misleading Investors on Strength of Money Laundering Program & Expected Losses from Securities Sale after Crypto Exchange FTX Collapse, Silvergate Failed to Monitor More than $1 Trillion Transactions & $9 Billion in Suspicious FTX Transfers, Silvergate Winded Down Banking Operations in 2023 March
3rd July 2024 | Hong Kong
The United States Securities and Exchange Commission (SEC) has fined Silvergate Capital, ex-CEO & Chief Risk Officer $51.25 million for misleading investors on the strength of money laundering program & expected losses from securities sale after crypto exchange FTX collapse. Silvergate had failed to monitor more than $1 trillion transactions & $9 billion in suspicious FTX transfers. In 2023 March, Silvergate winded down banking operations. United States SEC (28/6/24): “The Securities and Exchange Commission today charged Consensys Software Inc. with engaging in the unregistered offer and sale of securities through a service it calls MetaMask Staking and with operating as an unregistered broker through MetaMask Staking and another service it calls MetaMask Swaps. According to the SEC’s complaint, since at least January 2023, Consensys has offered and sold tens of thousands of unregistered securities on behalf of liquid staking program providers Lido and Rocket Pool, who create and issue liquid staking tokens (called stETH and rETH) in exchange for staked assets. While staked tokens are generally locked up and cannot be traded or used while they are staked, liquid staking tokens, as the name implies, can be bought and sold freely. Investors in these staking programs provided funds to Lido and Rocket Pool in exchange for the liquid tokens. The SEC’s complaint alleges that Consensys engages in the unregistered offer and sale of securities by participating in the distribution of the staking programs and operates as an unregistered broker with respect to these transactions. The SEC further alleges that, since at least October 2020, Consensys has brokered transactions in crypto asset securities by, for example, soliciting investors to trade crypto asset securities, providing pricing and other investment information regarding crypto asset securities, purporting to provide investors with the “best” quote, accepting and routing customer orders, facilitating order execution, handling customer assets, and receiving transaction-based compensation. The SEC’s complaint, filed in federal district court in the Eastern District of New York, charges Consensys with violating the registration provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 and seeks injunctive relief and penalties. The SEC’s investigation was conducted by Daphna Waxman, Amy Mayer, and Abigail Cooper and supervised by Mark R. Sylvester, Kristin Pauley, and Jorge G. Tenreiro, all of the SEC’s Crypto Assets and Cyber Unit. The SEC’s litigation will be led by Samuel Wasserman under the supervision of Jack Kaufman and Mr. Tenreiro.”
“ United States SEC Fines Silvergate Capital, ex-CEO & Chief Risk Officer $51.25 Million for Misleading Investors on Strength of Money Laundering Program & Expected Losses from Securities Sale after Crypto Exchange FTX Collapse, Silvergate Failed to Monitor More than $1 Trillion Transactions & $9 Billion in Suspicious FTX Transfers, Silvergate Winded Down Banking Operations in 2023 March “
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement: “By allegedly collecting hundreds of millions of dollars in fees as an unregistered broker and engaging in the unregistered offer and sale of tens of thousands of securities, Consensys inserted itself squarely into the U.S. securities markets while depriving investors of the protections afforded by the federal securities laws. As this enforcement action shows, we continue to hold noncompliant actors in this space accountable, as we do across the securities market.”
United States SEC Fines Silvergate Capital, ex-CEO & Chief Risk Officer $51.25 Million for Misleading Investors on Strength of Money Laundering Program & Expected Losses from Securities Sale after Crypto Exchange FTX Collapse, Silvergate Failed to Monitor More than $1 Trillion Transactions & $9 Billion in Suspicious FTX Transfers, Silvergate Winded Down Banking Operations in 2023 March
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