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Judge Allows Lawsuit Against Silvergate for Alleged Complicity in FTX Fraud

Judge Allows Lawsuit Against Silvergate for Alleged Complicity in FTX Fraud


  • A federal judge allows a class-action lawsuit against Silvergate Bank for alleged complicity in fraud at FTX to proceed.
  • The lawsuit alleges that Silvergate knew about the fraud at FTX but profited from it, unjustly enriching itself at the expense of the exchange’s users.
  • Silvergate argued that it had no responsibility to the company’s customers, but the judge rejected this claim, allowing the lawsuit to move forward.

A class action lawsuit against Silvergate Bank has been authorized by a federal judge in connection with alleged fraudulent activities at FTX, a cryptocurrency exchange platform, and its associated trading company, Alameda Research.

Judge Ruth Bermudez Montenegro of federal court in San Diego rejected Silvergate’s attempt to dismiss the lawsuit, determining that the allegations presented were sufficient to continue the case.

The lawsuit claims that Silvergate was aware of the fraud at FTX, but profited from it, making profits at the expense of the company’s users.

It is argued that Silvergate owed a duty of care towards FTX customers, as its services, particularly the Silvergate Exchange Network (SEN), were crucial to FTX’s operations by facilitating fund transfers to cryptocurrency exchanges.

The court found that Silvergate benefited significantly from its partnership with FTX, with its annual revenue increasing substantially after it began providing banking services.

Silvergate argued in its motion to dismiss that it had no responsibility to FTX’s customers and that FTX’s inability to allow withdrawals was not due to Silvergate’s actions.

Judge allows lawsuit against Silvergate for alleged complicity in FTX fraud

However, the judge rejected these arguments from FTX, stating that Silvergate’s involvement was significant

Silvergate’s claim that , had it denied the company’s transfers, the exchange would have found another bank, was considered speculative by the judge, who noted that few banks were willing to serve the cryptocurrency industry.

The lawsuits were filed in February 2023, and three separate class actions against Silvergate were combined in April of the same year.

Silvergate collapsed in March 2023, shortly after the lawsuits were filed, and the company had already filed for bankruptcy in November 2022.

Sam Bankman-Fried, co-founder of FTX, was found guilty of several charges related to fraud and money laundering . His sentencing date is scheduled for March 28.

The judge’s decision allows the Silvergate class action lawsuit to move forward, based on allegations of complicity in fraud at FTX.

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