The Securities and Exchange Commission accused Silvergate Capital Corp., its former CEO Alan Lane, and its former chief risk officer Kathleen Fraher of deceiving investors regarding the effectiveness of their AML compliance program, bank secrecy act compliance, and client monitoring for cryptocurrency.

The business and previous executives were also accused of deceiving investors over the losses the firm would incur from anticipated securities sales in the wake of FTX's bankruptcy.

The SEC claims that Silvergate and Martino misrepresented the company's dire financial situation amid a bank run and liquidity crisis that followed FTX's bankruptcy. Following its announcement last year that it would be closing its banking activities, the company's shares finally fell to almost nothing.

"Instead of coming clean to investors about serious deficiencies in its compliance programs in the wake of the collapse of FTX, one of Silvergate's largest banking customers," states Gurbir Grewal, director of the SEC division of enforcement: "They doubled down in a way that misled investors about the soundness of the programs."

"In fact, Silvergate is said to have overlooked around $9 billion in questionable transfers involving FTX and its affiliated companies as a result of those flaws. Eventually, Silvergate's stock fell precipitously, costing investors billions of dollars in lost market value.

Silvergate has agreed to pay the California Department of Financial Protection and Innovation $20 million in addition to a $43 million penalty to the Federal Reserve System. The Fed and DFPI payments will balance the additional $50 million penalty imposed by the SEC.

In addition, Lane and Fraher agreed to a settlement that included civil fines of $1 million and $250,000, as well as permanent injunctions and five-year officer and director prohibitions, without acknowledging or refuting the claims.

In a statement from his lawyers, former chief financial officer Martino refuted the accusations.