Silvergate Faces Class Action For Aiding In FTX Fraud

A class-action lawsuit involving Silvergate Bank has been filed in the United States Court alleging it played a large role in the Sam Bankman-Fried’s FTX and Alameda Research scam.

On December 14, a class action lawsuit against Silvergate Bank, Silvergate Capital Corporation and Silvergate CEO Alan Lane was filed in the Southern District Court of California related to accounts held by crypto companies FTX and Alameda Research.

Joewy Gonzalez and others have accused Silvergate Bank of playing an integral role in the FTX scam by maintaining accounts, while supporting and abetting the collapse of FTX and Alameda Research’s breach of fiduciary duty.

According to the lawsuit, the plaintiff invested his savings in cryptocurrencies through the FTX exchange because the platform had promised investors that they could “safely store assets as they gain value, withdraw cash or exchange them for other assets”.

Previously, on December 6, three US senators wrote a letter to Silvergate asking for answers about the company’s role in the loss of billions of dollars in the FTX crash. Senators Elizabeth Warren, John Kennedy and Roger Marshall asked Lane for details about the company’s relationship with FTX.

Due to the effects of negative news about the complicated relationship with FTX, as it did last week, Silvergate Capital’s (SI -1.95%) stock took a fairly hard fall over the past five trading days. According to data compiled by S&P Global Market Intelligence, the bank with a heavy cryptocurrency habit saw its share price decline by more than 13% over the period, compounding the 19% drop of the previous week.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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