Silvergate Bank Faces Class-Action Lawsuit Over FTX Collapse
A class-action lawsuit has been filed against Silvergate Bank, Silvergate Capital Corporation, and CEO Alan Lane in the California Southern District Court. The suit concerns allegations linked to the bank’s role in handling accounts for the crypto firms FTX and Alameda Research.
The plaintiff, Joewy Gonzalez, asserts that Silvergate is responsible for enabling FTX to mismanage user deposits when FTX allegedly placed these assets into the accounts of Alameda, which ultimately contributed to panic in the crypto market and the subsequent bankruptcies of both companies.
The complaint claims that Gonzalez invested his savings in cryptocurrencies through the FTX exchange based on its assurances that users could securely store assets, cash them out, or trade them for other assets. It further alleges that Silvergate engaged in improper transfers and lending user funds, thus facilitating FTX’s purported fraud.
“Silvergate is liable for its role in furthering FTX’s investment fraud,” the lawsuit states. “They have an obligation to return what they owe to the plaintiff and other investors.”
The plaintiff is represented by Girard Sharp and Hartley LLP. As of now, the defendants’ legal counsel has not yet made an appearance in the case.
On Dec. 6, a trio of U.S. senators sent a letter to Silvergate seeking clarity on its relationship with FTX, highlighting concerns about the significant monetary losses incurred during the collapse of the exchange.
In a parallel development, attorneys for FTX are seeking judicial approval to liquidate FTX Europe and FTX Japan, as well as its derivatives exchange LedgerX and stock-clearing platform Embed. They argue that regulatory pressure on these entities necessitates a swift sale to mitigate further loss of value.
