Silvergate faces class-action lawsuit over FTX and Alameda dealings – Crypto News

A class-action lawsuit against Silvergate Bank, Silvergate Capital Corporation and Silvergate CEO Alan Lane was filed at the California Southern District Court concerning accounts held by embattled crypto companies FTX and Alameda Research.

The suits aims to hold Silvergate accountable for its alleged roles in placing FTX user deposits into the bank accounts of Alameda, which caused panic within the crypto market, eventually leading to both firms declaring bankruptcy.

The lawsuit was filed by the plaintiff Joewy Gonzalez on behalf of himself and others in the same situation. According to the suit, the plaintiff invested his savings in crypto through the FTX exchange as the platform promised investors that they were able to “store assets securely as they gained in value, cash them out or trade them for other assets.”

The suit alleges that Silvergate aided and abetted FTX’s fraudulent activities and the exchanges’ breaches of fiduciary duty through improper transfers, lending user funds and incoming funds. According to the lawsuit, Silvergate is liable for its role in “furthering FTX’s investment fraud” and has an obligation in returning what they owe to the plaintiffs and other investors.

The plaintiff is represented by Girard Sharp & Hartley LLP. On the other hand, the defendants’ counsel has not yet appeared at the time of writing.

Related: FTX ex-staffer: Extravagant expenditures and cult-like worshiping of SBF

On Dec. 6, three United States senators wrote a letter to Silvergate demanding answers on the firm’s role in the loss of billions of dollars during the FTX collapse. Senators Elizabeth Warren, John Kennedy and Roger Marshall asked Lane to provide details on the firm’s relationship with FTX.

Meanwhile, FTX lawyers have recently requested permission to sell off FTX Europe, FTX Japan, its derivatives exchange LedgerX and Embed, which is a stock-clearing platform. According to the lawyers, since the businesses are under regulatory pressure, the value of the assets is at risk and this merits an “expeditious sale process.”