3 lawsuits claim Silvergate Bank helped FTX to conduct fraud smoothly
Three lawsuits have been filed in the court against Silvergate Bank and all of them alleged that Silvergate Bank was one of the top supporters of FTX to unethically transfer FTX customers’ funds to the Alameda Research platform.
FTX was a highly popular crypto exchange but in Nov 2022 this exchange collapsed badly. On 19 Nov 2022, FTX filed for bankruptcy under Chapter 11 code along with 120 affiliated companies including the crypto hedge platform Alameda Research. Allegedly, FTX co-founder Sam Bankman-Fried (SBF) misused customers’ funds for personal benefits & also funded Alameda with the help of FTX customers’ funds.
On 19 April 2023, United States District Judge Jacqueline Scott Corley of the Northern District of California ruled that recently three lawsuits had been filed against Silvergate Bank & all of them targeting Silvergate as one of the culprits behind FTX exchange’s crypto fraud.
Plaintiffs claimed that Silvergate helped FTX to use customers’ funds for his other crypto company Alameda Research. All these three filed cases will remain independent from the other federal cases against FTX & SBF but three cases will be combined by mutual agreement between plaintiffs.
The court order stated:
“The Silvergate cases involve common questions of law and fact, as they name common defendants, arise from the same alleged course of conduct, and assert overlapping causes of action, such that the Silvergate cases are appropriate for consolidation.”
In early March of this year, Silvergate capital corporation announced that it will liquidate its Bank asset & further will stop banking service business by March.
Earlier, In Jan of this year, Silvergate Bank’s parent company Silvergate capital corporation faced a class action suit over securities law violation.
After the meltdown of Silvergate Bank, many reports claimed that Silvergate collapsed because of its financial relationship with crypto companies but later New York state’s financial regulator reported that Silvergate faced a bad situation because of its broad base of depositors across business sectors, not crypto.
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