Silvergate Bank, Silvergate Capital Corporation, and its chief executive Alan Lane face a class-action lawsuit in California courts, it was revealed this week.
The California Southern District Court received the lawsuit against the company with ties to the now-defunct crypto exchange platform FTX and Alameda Research.
It aims to hold Silvergate accountable for facilitating illegal money deposits, triggering massive bank runs across crypto platforms and their subsequent collapses.
Lawsuit Details
Joewy Gonzalez and others filed the litigation, which accuses FTX of failing to deliver on promises it would “store assets securely as they gained in value, cash them out or trade them for other assets.”
He and the linked plaintiffs alleged Silvergate facilitated FTX and its mismanagement of funds and illegal money transfers, lending, and mixing funding sources.
The lawsuit, represented by Girard Sharp and Hartley LLP, states that Silvergate engaged in “furthering FTX’s investment fraud” and called for the firm to return owed money to defrauded investors.
A Letter of Intent
United States Senators Elizabeth Warren, Roger Marshall, and John Kennedy, wrote to Silvergate on 6 December inquiring about its loss of billions in client holdings.
It read: “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-worth of customer funds, the senators are asking Silvergate to answer a set of questions to provide the public a full accounting of its relationship with FTX and Alameda and information about its safety and soundness by December 19, 2022.”
The news comes as lawyers for the embattled exchange requested authorities to sell its European and Japanese operations. They also plan to sell LedgerX and Embed, FTX’s stock-clearing platform, with lawyers citing regulatory pressures and asset risks.
