Main Points:
- In the complaint, it is said that Silvergate was responsible for FTX’s downfall in some way.
- Joey Gonzalez filed the action in order to seek compensation for himself and for others who found themselves in a similar position.
Silvergate Bank is accused of playing a substantial role in the Sam Bankman-FTX Fried’s and Alameda Research fraud, according to a class-action complaint that was submitted to a court in the United States, plaintiffs, in this case, include Joewy Gonzalez of Revere, Massachusetts, as well as “anyone else who finds themselves in a like position.”
They claim (1) that the cryptocurrency bank is to blame for the alleged fraud that occurred at the now-defunct FTX exchange because the bank maintained accounts for the FTX exchange as well as its sister trading company, Alameda Research, which allowed for a breach of fiduciary responsibility to occur.
As a result of the platform’s guarantee to investors that they could “securely store assets as they acquire value, withdraw cash, or swap them for other assets,” the defendant is said to have invested his money in cryptocurrencies by way of the FTX exchange.
On December 6, three senators from the United States sent a letter (2) to Silvergate in which they requested information on the company’s involvement in the losses totaling billions of dollars that occurred after the collapse of FTX. Senators John Kennedy, Roger Marshall, and Elizabeth Warren all requested more information from Lane regarding the relationship between his company and FTX.
At the beginning of this month, a number of senators representing both political parties voiced their interest in receiving additional information from Silvergate regarding the company’s financial health and authority over the FTX and Alameda funds.
At the end of September, 90 percent of Silvergate’s total deposit base came from crypto enterprises that operate in a market that is very unpredictable. This figure demonstrates the bank’s concentration on serving customers who have digital assets.
At least two of Silvergate’s businesses that deal in digital assets have filed for bankruptcy in the last month: FTX and its affiliates and BlockFi. Both of these companies were clients of Silvergate. Despite this, Silvergate’s involvement in the cryptocurrency market is not limited to the company’s deposits.
Services Offered by Silvergate
Silvergate is one of the few banks in the United States that allows customers to convert dollars into crypto for cryptocurrency exchanges.
This service is offered to Silvergate customers alone. According to recent proceedings regarding FTX’s bankruptcy, FTX and allied entities, such as Alameda Research, which was the firm’s hedge fund & proprietary trading organization, held a total of 20 separate accounts at Silvergate.
A lawsuit that was lodged against Bankman-Fried & his top colleagues alleges that over the course of the past few years, billions of dollars in wire transfers had made their way to FTX Group through Silvergate.
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