WASHINGTON – Sen. John Kennedy (R-La.), ranking member of the Senate Banking Subcommittee on Economic Policy, and Sens. Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.) wrote to Silvergate, the bank that reportedly facilitated the transfer of FTX customer funds to Alameda Research, seeking answers about the bank’s role in the loss of billions of customer dollars. 

“Your bank’s involvement in the transfer of FTX customer funds to Alameda reveals what appears to be an egregious failure of your bank’s responsibility to monitor for and report suspicious financial activity carried out 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 that Silvergate may have played in these losses,” wrote the senators. 

Silvergate caters to digital asset clients—as of September 30, 90% of its overall deposit base came from crypto firms operating in a highly volatile market. The senators note that Silvergate’s average deposits quarter-to-date are down more than $2 billion since the end of September. In the past month, two of Silvergate’s digital assets clients—FTX and its affiliates and BlockFi—have declared bankruptcy.

In September, Silvergate asserted that its “relationship with FTX [and its related entities] is limited to deposits.” While Silvergate failed to explain what it meant by “related entities,” documents from FTX’s bankruptcy case confirmed that the bank had relationships with several firms controlled by FTX’s former CEO Sam Bankman-Fried, including Alameda, which is the crypto trading firm that Bankman-Fried claimed was a “wholly separate entity” from FTX. 

“Mr. Bankman-Fried has, himself, admitted that FTX customer funds were improperly transferred to Alameda’s bank accounts. When asked how FTX customer deposits ended up in Alameda’s accounts, Mr. Bankman-Fried told Vox that the company did not originally have a bank account, and so it directed customers to wire money to Alameda’s account with Silvergate in exchange for assets on FTX. According to Mr. Bankman-Fried, executives at the company ‘forgot’ about this scheme until the company imploded,” explained the senators. 

This arrangement between FTX and Alameda relied on Silvergate’s depository services, and Alameda’s depository account with Silvergate appears to be at the center of improper transfers of customer funds.

The senators note that Silvergate’s failure to take notice of and report this scheme could constitute violations of the law—including a failure to implement or maintain an effective anti-money laundering program as required under the Bank Secrecy Act and a failure to report suspicious transactions to the Financial Crimes Enforcement Network. 

Given these concerns about Silvergate’s failure to apply extensive review processes to FTX and Alameda, and the possible role the bank may have played in the loss of billions of dollars of customer funds, the senators are asking Silvergate to answer a set of questions by Dec. 19, 2022. The questions will help provide the public with a full accounting of Silvergate’s relationship with FTX and Alameda and information about its safety and soundness.

The full letter is available here.

MADISONVILLE, La. – Sen. John Kennedy (R-La.) joined Sen. Dan Sullivan (R-Alaska) and more than 40 other senators in writing to China’s ambassador to the U.S., Qin Gang. The bipartisan group warned the Chinese Communist Party not to respond to peaceful Chinese protesters with a violent retribution.

“We are following the current peaceful protests in China over your government’s policies very carefully. We are also closely watching the Chinese Communist Party’s (CCP) reaction to them,” wrote the senators, noting that the Chinese Communist Party and People’s Liberation Army killed hundreds, if not thousands, of Chinese students who were peacefully protesting in 1989. 

“We caution the CCP in the strongest possible terms not to once again undertake a violent crackdown on peaceful Chinese protesters who simply want more freedom. If that happens, we believe there will be grave consequences for the US-China relationship, causing extraordinary damage to it,” the lawmakers said.

The full letter is available here.

WASHINGTON – Sen. John Kennedy (R-La.) today voted to give railroad workers and management additional time to resolve their dispute and protect Americans from an economic disaster. 

Kennedy also voted to grant workers seven additional days of paid sick leave. Both of these attempts failed to pass the Senate. Kennedy then voted to avert the strike and its economic consequences.

“I voted to give the parties more time because, with extra time, I think the workers and management could resolve their issues. I cast my second vote in support of the workers, because I think they have a valid point. My third vote supported an agreement because I think a nationwide strike would hurt shippers, consumers and workers. 

“I really regret that this problem ended up in the lap of Congress. Pres. Biden was not honest with the American people when he told them—before the midterm elections—that he had successfully mediated a resolution of the issues and that there would not be a strike,” said Kennedy. 

WASHINGTON – Sen. John Kennedy (R-La.), a member of the Senate Appropriations Committee, today announced $15,152,459 in Federal Emergency Management Agency (FEMA) disaster aid for Louisiana.

“I’m grateful to see $15.2 million supporting recovery efforts in Jefferson Parish, Cameron Parish and other parts of Louisiana where Laura and Ida’s blows were devastating,” said Kennedy.

The FEMA aid will fund the following:

• $5,940,177 to the Louisiana Department of Transportation and Development for Public Assistance Alternative Procedures for debris removal and monitoring related to Hurricane Laura.
• $5,191,104 to the Dixie Electric Membership Corporation for emergency recovery efforts related to Hurricane Ida.
• $2,708,866 to Cameron Parish for building repairs related to Hurricane Laura.
• $1,312,312 to Lafitte Area Independent Levee District for right-of-way debris removal and monitoring related to Hurricane Ida.