It has been claimed that the fraud section of the United States Department of Justice is conducting an investigation against crypto bank Silvergate for its involvement in the defunct FTX exchange and its affiliates.

According to a story published on February 3 by Bloomberg, citing “people familiar with the matter,” the investigation is looking into the hosting of Silvergate accounts that are linked to the companies of former FTX CEO Sam Bankman-Fried.

The California-based cryptocurrency bank is not suspected of any wrongdoing; however, detectives are trying to determine the extent to which the business was conducted with FTX and Alameda.

FTX’s failure in November had a significant negative effect on Silvergate, which resulted in a $1 billion loss in the most recent quarter. As a result of the collapse of the SBF empire, the bank was forced to lay off forty percent of its workforce and admit that it had borrowed billions of dollars to avoid a liquidity crisis and a bank run.

Federal government investigators are trying to determine if Silvergate and any other companies that collaborate with FTX were aware of the problem.

According to Silvergate, Alameda signed a banking relationship with the institution in 2018, before the launch of FTX. According to the report, it claims that it exercised adequate due diligence and maintained continuous monitoring in the relevant period.

A spokesperson for the financial institution said earlier this week that the company “has a rigorous compliance and risk management procedure.”

Josh Rager, a cryptocurrency trader, commented on the potential effects this latest criminal investigation may have on cryptocurrency exchanges that are connected to Silvergate.

On January 27, Silvergate announced that the company will temporarily suspend dividend payments, citing “recent volatility in the digital asset business.” At the time, he said he had a “cash position that exceeded his deposits related to digital asset customers.”

According to MarketWatch, Silvergate shares are down 13% on the day and are now trading at $17.14 in after-hours trading. In addition, the price of SI is today 92% lower than in November 2021, when it reached its all-time high of $220.