Silvergate Accused that it “Aided and Abetted FTX’s Fraud” in Lawsuit
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Silvergate Accused that it “Aided and Abetted FTX’s Fraud” in Lawsuit

Silvergate Bank is facing a class-action lawsuit for its alleged direct participation in FTX's fraudulent scheme.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Silvergate Bank is facing a class-action lawsuit for its alleged involvement in the FTX’s fraud scheme that misused billions of dollars of investors’ funds. Filed on behalf of himself and other investors, plaintiff Gonzalez says Silvergate “directly aided and abetted” FTX’s scheme through participation in making improper transfers, commingling of funds, and lending out user funds.

Silvergate Accused of Helping FTX Conduct Improper Transfers and Lend Out Investors’ Funds

Silvergate Bank, a financial services firm that serves crypto and fintech businesses, is facing a class-action lawsuit for its alleged involvement in the FTX debacle. The case is filed at the California Southern District Court against Silvergate Bank, its affiliate Silvergate Capital Corporation, and CEO Alan Lane.

The lawsuit, filed by plaintiff Joewy Gonzalez on behalf of himself and other investors affected by the collapse, accuses Silvergate of playing a significant part in FTX’s fraud, orchestrated by the exchange’s founder Sam Bankman-Fried. The plaintiff claims Silvergate handled billions of dollars worth of transactions from FTX’s client account at the bank to the accounts of Alameda Research, FTX’s sister trading firm.

“Silvergate, a publicly traded and federally regulated bank catering to cryptocurrency customers, maintained both FTX and Alameda accounts. It directly aided and abetted FTX’s fraud and breaches of fiduciary duty via first-hand participation in the commingling of funds, improper transfers, and lending out of customer money. Silvergate processed billions in transfers from FTX’s client account at Silvergate to the Alameda accounts.”

– the class action lawsuit claims.

Moreover, the lawsuit alleges that Silvergate accepted deposits from FTX users, which were then transferred to Alameda’s bank accounts “and misused.” In his defense, Bankman-Fried said he “forgot” about these transfers until FTX collapsed.

“It looks like people wired $8b to Alameda and, oh, god, we basically forgot about the stub account that corresponded to that and so it was never delivered to FTX.”

– SBF told a Vox reporter via Twitter.

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Silvergate’s Involvement Noted in Previous Letter Signed by Three US Senators

The class-action lawsuit comes less than two weeks after Silvergate received a letter signed by three US senators, asking the bank’s CEO Alan Lane a series of questions concerning the bank’s relationship with FTX. In the letter, Senators Elizabeth Warren, John Kennedy, and Roger Marshall noted Silvergate’s “egregious failure” of its responsibility to monitor suspicious financial activity.

The letter added that Silvergate failed to “take adequate notice” of FTX’s fraudulent scheme, indicating that the bank could have been unable to carry out an effective anti-money laundering plan.

Sam Bankman-Fried was arrested earlier this week by the Royal Bahamas Police Force. Just a day later, the billionaire was charged by the SEC for orchestrating a “years-long” scheme to defraud investors who committed almost $2 billion to FTX.

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Do you think more organizations and companies could face lawsuits for participating in FTX’s fraud? Let us know in the comments below.