According to a report, Silvergate Bank, which is no longer operational, is facing three lawsuits from former investors who allege that the bank aided FTX, a now-bankrupt crypto exchange, in defrauding investors.
The lawsuits have been consolidated by California Judge Jacqueline Scott Corley of the Northern District since they involve common defendants, overlapping causes of action, and stem from the same alleged course of conduct.
The plaintiffs, Matson Magleby, Golam Sakline, Nicole Keane, and Sonam Bhatia, filed the three suits in February, and they accuse Silvergate of assisting FTX in committing fraud by facilitating unauthorized transfers of FTX customer funds to its related trading entity, Alameda Research.
It’s worth noting that the consolidation of the lawsuits will not impact other federal cases against FTX and its founder. Additionally, Silvergate was hit with a class-action lawsuit in January, accusing it of violating securities laws; this triggered a bank run forcing the bank to declare its intent to liquidate assets and shut down operations in early March.
FTX declared bankruptcy in November 2022, and Silvergate was among the firms hit hard by the fallout. Earlier this year, the bank reported a $1 billion loss for the fourth quarter of 2022 as a result of investor withdrawals following the FTX bankruptcy, as the exchange was once one of Silvergate’s largest customers. The company also laid off 40% of its employees in January.
Meanwhile, the New York State Department of Financial Services (DFS) has clarified that the reason for Signature Bank’s collapse was unrelated to crypto and was caused by a run from depositors across various business sectors. Signature Bank, which was also crypto-friendly, was seized by federal regulators in March, and Flagstar Bank acquired it while excluding crypto deposits.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
