Summary
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Anchorage Digital Bank is under investigation by the US Department of Homeland Security’s El Dorado Task Force, which focuses on financial crimes like money laundering. This investigation follows previous regulatory concerns regarding the bank’s compliance with the Bank Secrecy Act and Anti-Money Laundering (BSA/AML) standards.
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The investigation involves contacting former employees of Anchorage Digital, but the details and scope of the probe are currently undisclosed.
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Despite the regulatory scrutiny, Anchorage Digital remains a significant player in the digital asset industry, evidenced by its partnerships with major financial institutions like Cantor Fitzgerald and BlackRock, including acting as custodian for BlackRock’s spot crypto ETFs.
Anchorage Digital Bank, the first federally chartered digital asset bank in the United States, is currently under investigation by the Department of Homeland Security, according to a report in Barron’s citing informed sources.
Federal Task Force Launches Investigation
This probe comes after the bank previously faced regulatory censure for alleged failures in adhering to the Bank Secrecy Act and Anti-Money Laundering (BSA/AML) regulations.
El Dorado Task Force Leads Inquiry, Contacting Former Staff
The El Dorado Task Force, a division of Homeland Security specializing in financial crime and money laundering, is reportedly leading the inquiry.
Investigators from the task force have reached out to individuals formerly employed by Anchorage Digital as part of their information-gathering process.
At this stage, details concerning the focus and scope of the investigation remain undisclosed.
Anchorage’s Prominent Role and Key Partnerships
Despite the ongoing investigation, Anchorage Digital holds a prominent position in the digital asset sector and has cultivated partnerships with major financial entities.
These collaborations include affiliations with firms like Cantor Fitzgerald, once led by Howard Lutnick (currently serving as US Commerce Secretary), and the asset management giant BlackRock.
Collaborations with Cantor Fitzgerald and BlackRock Highlighted
Cantor Fitzgerald deepened its involvement in the crypto space last November through a partnership involving Anchorage and Copper.
This collaboration positions Anchorage and Copper as custodians and collateral managers for Cantor Fitzgerald’s new Bitcoin financing business, with an initial funding target of $2 billion.
The venture is designed to provide institutional-grade digital asset custody solutions.
Furthermore, BlackRock selected Anchorage Digital to serve as custodian for its recently launched spot crypto Exchange Traded Funds (ETFs).
BlackRock currently manages spot ETFs for both Bitcoin (IBIT) and Ethereum (ETHA).
By the close of the first quarter of this year, these spot crypto ETFs under BlackRock’s management had accumulated approximately $50 billion in assets, as indicated in the company’s Q1 financial report.
Prior Regulatory Scrutiny by OCC in 2022
It’s noteworthy that Anchorage Digital’s banking division has encountered regulatory challenges in the past.
In 2022, the Office of the Comptroller of the Currency (OCC) took regulatory action against the bank for deficiencies in meeting its BSA/AML obligations, as stipulated in its operational agreement with regulators.
Also Read: Paradigm Capital Transfers 3,718 ETH to Anchorage Digital Amid Rippling ETH Prices
Anchorage Digital received 3,718 ETH from Paradigm Capital, an employee-owned independent investment dealer. The transfer, valued at $12 million, reduced Paradigm’s portfolio balance to around $415 million. However, due to an increase in crypto assets, the portfolio balance had risen to over $422 million. Paradigm’s majority holdings, or $276.42 million, were in Ethereum, with 70 million LDO, valued at $146.30 million. The investment dealer’s crypto asset portfolio includes OP, QWLA, INS, AAA, and BNB. After a maintenance period since 2019, Paradigm’s portfolio achieved a profit of $26.53 million. In November 2021, Paradigm’s portfolio generated its highest profit margin, reaching $919 million. Since Paradigm’s move, the price of ETH has…[Read More]
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