Feb 16, 2023
Silvergate Bank, CEO Accused of Aiding Fraudulent Scheme
Silvergate Bank and its CEO Alan Lane are facing a class-action lawsuit that accuses them of aiding and abetting a multibillion-dollar fraudulent scheme orchestrated by Sam Bankman-Fried (SBF) and two of his entities, FTX and Alameda Research. The lawsuit was filed on February 14th in the United States District Court for the Northern District of California.
The plaintiff, Soham Bhatia, is a San Francisco-based FTX user who was frozen out of around $20,000 in crypto when the exchange collapsed last year. He claims that Silvergate Bank, its parent company Silvergate Capital Corporation and CEO Alan Lane were aware of the use of FTX customer funds by Alameda Research and accuses them of concealing “the true nature of FTX” from its customers.
The lawsuit alleges that Silvergate and Lane “aided, abetted, encouraged and substantially assisted” Bankman-Fried in jointly perpetrating a fraudulent scheme upon Bhatia and other members of the proposed class. It seeks damages, restitution and disgorgement of profits with the amount to be determined in trial.
However, the lawsuit has not yet been certified by the district court, which is a necessary step before it can proceed as a class action.
This is not the first class-action complaint against Silvergate over the last two months. On December 14th, plaintiff Joewy Gonzalez filed a similar class-action suit in the U.S. District Court for the Southern District of California — accusing Silvergate of its alleged role in “furthering FTX’s investment fraud” by aiding and abetting the crypto exchange when it placed FTX user deposits into the bank accounts of Alameda.
On January 10th, a class-action suit was filed against Silvergate Capital Corporation in the United States District Court of Southern California alleging that Silvergate’s platform failed to detect occurrences of money laundering “in amounts exceeding $425 million” involving South American money launderers.
Last week, algorithmic trading firm Statistica Capital filed a putative class-action lawsuit against New York-based Signature Bank, alleging it had “actual knowledge of and substantially facilitated the now-infamous FTX fraud.”
The web3 space has been abuzz with news of Silvergate’s involvement in these various legal cases, and the financial implications of these cases could have far-reaching consequences for Silvergate and those involved in the crypto space. Silvergate is currently the second-most shorted stock on Wall Street, with 73% of its float being shorted.
As crypto and NFTs become increasingly popular, the need for a reliable and trustworthy web3 agency that can help with NFT promotion and marketing is becoming increasingly important. Silvergate’s alleged role in these cases could have a significant impact on the trustworthiness of the web3 space.
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Cointelegraph has reached out to Silvergate for comment but did not receive a response at the time of publication.
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