Three US senators sent a letter to Silvergate bank about its role in the collapse of the FTX cryptocurrency exchange.

A central problem in the FTX collapse was that FTX did not have its own bank account in the early days, so clients sent funds to the related party Alameda, which should have been delivered to FTX. But instead, there was only one intercompany ledger entry. Former CEO Sam Bankman-Fried said the figure for these transfers ranges from $5 billion to $8 billion in various statements.

“Your bank’s involvement in the transfer of client funds from FTX to Alameda reveals what appears to be a flagrant breach of your bank’s responsibility to monitor and report suspicious financial activity by its clients. The public is owed a full accounting of the financial activities that may have led to the loss of billions in customer assets, and any role Silvergate may have played in these losses,” Sens. Warren (D) wrote. Marshall (Republican) and Kennedy. (Republican).

The senators also point out that 90% of the bank’s deposits came from crypto companies at the end of September. Both FTX and the bankrupt BlockFi were clients.

Silvergate was requested to provide a “full accounting” of its relationship between FTX and Alameda by December 19. The bank’s share price is down 6.7% today and 56% since FTX halted withdrawals.

This issue is a central issue in the ability to prove whether the behavior of FTX’s senior management was criminal fraud or just negligence, as Bankman-Fried tries to portray in his media tour.

Earlier today, we outlined a crucial unanswered question. The fact that the money was transferred to Alameda is only half the story. What has not been sufficiently answered is what happened after the intercompany accounting entries were made.

When the clients who made these transfers to Silvergate subsequently placed orders with FTX to buy cryptocurrencies like Bitcoin and Ether, how did FTX buy the cryptocurrency without the money?

These cryptocurrencies appeared on clients’ FTX accounts. So, were these cryptocurrencies ever purchased on behalf of the client?

Hypothetically, if the ledger system was designed to make it look like crypto was purchased when none was purchased, that could be prima facie evidence of criminal fraud.