Signature Bank Accused Of Facilitating The FTX Crisis

Key Points:

• Signature Bank faces a putative class-action suit for its involvement in the operations of the now bankrupt cryptocurrency exchange FTX.
• The bank did this even though it had observed suspicious FTX transfers through its Signet blockchain payment network, Statistica Capital said in a complaint.
• Signature said it intends to shed as much as $10 billion in deposits from digital asset clients.

In a lawsuit, an investment firm claimed that crypto-friendly Signature Bank helped the FTX collapse by permitting the now-defunct cryptocurrency exchange to mix client accounts with its blockchain network.

Statistica Capital Ltd. filed a case on Monday in federal court in Manhattan with a complaint dated February 6 alleging that Signature did this despite having seen suspicious FTX transactions over its Signet blockchain payment network.

“In particular, Signature knew of and permitted the commingling of FTX customer funds within its proprietary, blockchain-based payments network, Signet.”

Statistica claims it repeatedly informed the bank that the money was intended for FTX, but the bank nonetheless permitted the money to be moved into Alameda-controlled accounts.

The bank stated in December that it planned to withdraw up to $10 billion in deposits from clients who hold digital assets as it began a general withdrawal from the cryptocurrency sector in the aftermath of the FTX blowup. As of November 14, the business reported, FTX deposits made up less than a tenth of one percent of the bank’s total deposits.

According to the 87-page complaint, Signature had actual knowledge of the FTX fraud since at least June 2020 and substantially facilitated it by publicly endorsing the exchange and failing to close, suspend or otherwise limit Alameda or FTX accounts that were in contravention of terms of service.

The British Virgin Islands-based company Statistica, formerly known as Statistica Fund Ltd., brought the complaint as a proposed class action to seek compensation for losses it and other parties sustained as a result of Signature’s wrongdoing.

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