Silvergate is being sued to hold it responsible for its claimed roles in transferring FTX user deposits to Alameda bank accounts.
Concerning funds held by troubled cryptocurrency firms FTX and Alameda Research, a class action complaint was filed at the California Southern District Court against Silvergate Bank, Silvergate Capital Corporation, and Silvergate CEO Alan Lane.
The lawsuit seeks to hold Silvergate liable for its alleged responsibilities in transferring FTX customer money into Alameda’s bank accounts, which sparked panic in the cryptocurrency market and ultimately resulted in both companies filing for bankruptcy.
Plaintiff Joewy Gonzalez brought the action on his behalf and that of others who shared his circumstances. The lawsuit claims that the plaintiff used the FTX exchange to invest his savings in cryptocurrencies since the platform assured users that they could “keep assets securely as they rose in value, pay them out or trade them for other assets.”
The lawsuit claims that Silvergate improperly transferred funds, lent user funds, and mixed funds to facilitate FTX’s fraudulent activities and the exchanges’ violations of fiduciary duty. By the complaint, Silvergate iresponsible for “furthering FTX’s investment scam” and must repay the plaintiff and other investors what they are owed.
Girard Sharp and Hartley LLP is the plaintiff’s legal counsel. The defense attorney for the defendants hasn’t yet shown up, on the other hand, as of this writing.
Three US senators issued a letter to Silvergate on December 6 asking for information on the company’s involvement in the billions of dollars in losses during the FTX collapse. Senators John Kennedy, Elizabeth Warren, and Roger Marshall urged Lane to elaborate on the company’s ties with FTX.
FTX’s legal team:
While this is happening, FTX’s legal team has recently asked for authorization to sell off FTX Europe, FTX Japan, its derivatives exchange LedgerX, and Embed, a stock-clearing platform. The value of the assets is at stake since the businesses are subject to regulatory pressure, say the attorneys, and this justifies using an “expeditious selling process.”