Silvergate, once renowned for its cryptocurrency-friendly stance, is undergoing a tumultuous period, marked by the departure of its top executives. CEO Alan Lane, along with key figures John Bonino and Antonio Martino, is stepping down amidst a backdrop of ongoing liquidation and investor legal conflicts.
Alan Lane and John Bonino’s departure is set for August 15, while Antonio Martino is slated to leave on September 30. These exits are part of Silvergate Capital’s strategy to progressively shut down and voluntarily liquidate its subsidiary, Silvergate Bank.
Meanwhile, according to a filing with the Securities and Exchange Commission, the bank’s parent company affirmed that the executives will not receive further compensation based on their employment agreements but will be eligible for severance benefits.
Silvergate Leadership Transition
Kathleen Fraher, the Chief Transition Officer of the company, will take over Alan Lane’s role as the principal executive officer. Simultaneously, Andrew Surry, the Chief Accounting Officer of the bank, will step into Antonio Martino’s role as the principal financial officer.
The departing executives’ exit is intertwined with a series of legal battles and proposed lawsuits that have emerged against Silvergate. These lawsuits primarily revolve around alleged misconduct linked to the once-leading crypto exchange FTX.
Silvergate and CEO Alan Lane have become the focal points of these legal actions, entailing accusations of their involvement in FTX’s purported fraudulent activities.
Notably, a lawsuit filed by the Word of God Church alleges that the bank improperly employed $25 million of church deposits in a supposedly fraudulent scheme orchestrated by FTX. Another class action lawsuit asserts that the company failed to conduct adequate due diligence on its crypto clients, particularly FTX, Alameda Research, and a few others. This lawsuit names other prominent clients such as Binance.US, Huobi Global, Nexo Capital, and Bittrex.
The root of the issue traces back to Silvergate’s staggering $1 billion losses triggered by the collapse of FTX, one of its major clients. The ripple effect of this setback not only impacted Silvergate but also reverberated across the broader cryptocurrency ecosystem and the US banking sector. The bank had been one of the few regulated financial institutions catering to the banking needs of crypto firms and exchanges.