Silvergate Bank Has Been Sued for “Aiding and Abetting” FTX Fraud

Silvergate Bank Has Been Sued for "Aiding and Abetting" FTX Fraud
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Soham Bhatia has filed a new lawsuit targeting crypto-friendly Silvergate Bank on behalf of himself and all others in a similar situation, citing the bank’s connections to the infamous Sam Bankman-Fried (SBF) and the failed crypto exchange FTX.

The lawsuit, which was submitted before the United States District Court for the Northern District of California, is the most recent instance of a class action lawsuit that has been filed against the bank in the last two months because of its ties to the defunct entities.

The San Francisco-based FTX user was locked out of almost $20,000 worth of cryptocurrencies after the exchange went out of business last year, just like all other FTX users.

Silvergate Slapped With a New Lawsuit

According to the complaint, Silvergate Bank, its parent firm Silvergate Capital Corporation, and CEO Alan Lane were aware that Alameda Research had misappropriated cash from FTX customers, and they have been hiding “the true nature of FTX” from its customers.”

Silvergate Bank Has Been Sued for "Aiding and Abetting" FTX Fraud

Furthermore, Soham Bhatia emphasized that the bank independently created a specialized network known as the “Silvergate Exchange Network (SEN),” which enables exchanges like FTX to provide their consumers with a 24-hour, 7-day trading platform for cryptocurrency.

It continued to claim that it witnessed the transfer of billions of dollars in investor funds from FTX to Alameda, then back out of Alameda to settle debts and benefit Bankman-Fried and his close associates.

“But despite this knowledge, Silvergate, which proudly displayed on the home page of its website a quote by Bankman-Fried heralding Silvergate as the bank that “revolutionized crypto banking,” did nothing,” according to the statement.

The amount sought in the lawsuit—which will be established at trial—will be a combination of damages, restitution, and disgorgement of profits.

At the time of publication, the district court had not yet certified the lawsuit, which is needed before it can move forward as a class action.

This was not the first class action to be brought against the California-based crypto-friendly bank. On December 14, plaintiff Joewy Gonzalez filed a similar class-action complaint in the California Southern District Court, charging Silvergate with aiding and abetting the cryptocurrency exchange by depositing funds from FTX users into Alameda accounts, thus “furthering FTX’s investment fraud.”

Following that, several lawsuits have been filed by investors and former FTX/Alameda customers seeking to recoup their losses.


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