Silvergate, A “Crypto-Friendly Bank,” Has Been Sued For Securities Law Violations

Key Points:

• A class-action lawsuit has been filed against Silvergate Bank in the Southern District Court of Southern California, alleging violations of the Securities Exchange Act of 1934.
• Silvergate’s platform failed to detect cases of money laundering, resulting in regulatory sanctions for the company.

The bleak days for Silvergate have not yet come to an end as a result of recent developments in the litigation regarding the violation of the securities law.

On January 10, 2022, a class-action lawsuit was filed against Silvergate Bank in the Southern District Court of Southern California. The complaint, which alleges violations of the Securities Exchange Act of 1934, was filed on behalf of all purchasers of Silvergate securities between November 9, 2021 and January 5, 2023.

Alan Lane, the Chief Executive Officer, and Antonio Martino, the Chief Financial Officer, are both named as defendants in the complaint. According to the plaintiffs’ arguments in the case, the bank’s software failed to detect instances of money laundering, which will likely result in the company being subject to regulatory sanctions. According to the legal documents, “Silvergate’s optimistic comments about the business, operations, and outlook of the bank are severely misleading and without sound basis.” the bank’s securities are trading at an inflated price to investors as a result of these fraudulent representations.”

This information pertains to the transfer of $425 million to money launderers in South America and was published by Marcus Aurelius Research on November 15, 2022. This case involves the money laundering operation that was conducted through Silvergate. The bank’s stock price plummeted shortly after the information was made public.

After the bank disclosed new statistics suggesting that deposits of cryptographic assets owned by financial institutions dropped by 68% in the final quarter of 2022, from $11.9 billion to $3.8 billion, the stock price continued to fall. This occurred after Silvergate made this revelation.

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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