Crypto Bank, Silvergate, Sued for Abetting FTX Fraudulent Activities

Lawsuits have been filed against Silvergate Bank, Silvergate Capital Corporation and Silvergate CEO Alan Lane. silvergate bank A leading San Diego-based bank with innovative businesses in fintech and cryptocurrency.

The lawsuit blames Alameda Research, which filed for Chapter 12 bankruptcy in November, and Silvergate’s role in depositing FTX users’ deposits into FTX’s bank accounts.

silver gateis a publicly traded, federally regulated bank that maintains accounts with both FTX and its affiliate, Alameda Research, and plaintiffs are accused of “mixing funds, improperly transferring funds, and directly participated in the money. “

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According to court filings, plaintiff Joey Gonzalez and “all other similar circumstances” entrusted their investment to the now-bankrupt cryptocurrency exchange FTX, which investors “keep their assets safe.” It can be converted into cash or traded,” he promised. Use them for other assets or financial instruments. ”

In a July 2019 podcast interview, Silvergate CEO Alan Lane discussed the risks in banking in the digital currency industry, stating in part:

The biggest risk is [Anti-Money Laundering] dangerous. So broad regulation, it’s the Bank Secrecy Act. AML, KYC, it’s all different ways of saying the same thing. It’s about making sure you know who your customers are and that you’re never providing funding, financing, etc. for illegal activities.The penalties are fines and It can be very demanding. Basically, you could put your entire bank at risk.

However, the collapse of FTX last month has left plaintiffs and other FTX investors unable to recoup their investments, facing “years of uncertainty and catastrophic losses.”

The lawsuit also alleges that the defendants made misleading statements and failed to disclose that the company’s platform lacked adequate controls and procedures to detect cases of money laundering.

“FTX/Alameda was one of Silvergate’s most important customers, and its business operations and profits were closely linked. profited from deposits by

2 weeks ago bear cave Highlighted a petition for forfeiture of probable cause filed in Broward County in August 2022, alleging Silvergate was involved in a money laundering operation. filing, First highlighted by Marcus Aurelius Researchpartially read,

Here are the records made by Silvergate Bank: (i) Between September 2021 and June 2022, 10 companies transferred a total of over $425 million from these cryptocurrency trading platforms to various US bank accounts. (ii) the account received funds in the same pattern used to facilitate fraudulent money laundering;

As a result, Signature Bank and Silvergate Capital, two financial firms with exposure to the world of digital currencies, have seen their share prices plummet since cryptocurrency broker FTX went bankrupt about a month ago.

It added that “Silvergate’s actions and inactions were integral to Sam Bankman-Fried’s business” and that all financial transactions were conducted in “clear visibility” of the La Jolla-based firm.

The news of the class action lawsuit against Silvergate came after Morgan Stanley downgraded the company’s shares from “equal weight” to “underweight” last week, sending the stock price plummeting.

To put more pressure on the company, a group of senators, including longtime cryptocurrency pundit Elizabeth Warren, sent a letter to Silvergate CEO Alan Lane, urging the bank and FTX and Bankman Freed to requested to disclose information about its relationship with the entity.

“The bank’s involvement in the transfer of FTX customer funds to Alameda appears to be a gross failure of the bank’s responsibility to monitor and report questionable financial activity by its customers,” the letter states. increase.

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