Multiple Silvergate lawsuits over alleged FTX ties combined by judge
Plaintiffs seeking damages from Silvergate’s collapse have joined forces via their respective lawsuits.
A California judge has combined three investor lawsuits against defunct crypto bank Silvergate Bank involving the bankrupt crypto exchange FTX.
On April 19, United States District Judge Jacqueline Scott Corley of the Northern District of California ruled that the three lawsuits would be consolidated. Each accuses Silvergate of helping to facilitate investor fraud by the collapsed crypto exchange FTX.
The three cases were brought against Silvergate by four former investors. They will remain separate from other federal cases against FTX and its founder Sam Bankman-Fried but will be combined by mutual agreement of the litigants, according to an April 19 report from Law360.
The order stated:
“The Silvergate cases involve common questions of law and fact, as they name common defendants, arise from the same alleged course of conduct, and assert overlapping causes of action, such that the Silvergate cases are appropriate for consolidation.”
Matson Magleby, Golam Sakline, Nicole Keane, and Sonam Bhatia filed the trio of suits in February.
The plaintiffs allege that Silvergate aided and abetted FTX’s alleged misconduct. Actions included processing illegitimate transfers of FTX customer funds to its sister trading firm Alameda Research.
Silvergate disclosed its plans to “voluntarily liquidate” assets and shut down operations in early March following a bank run. Additionally, the bank was hit with a class-action suit in January for securities law violations.
FTX filed for bankruptcy in November last year and its collapse and the resultant crypto market crash created liquidity problems for Silvergate.
Related:What does the Silvergate collapse mean for crypto?
In a related development, New York state’s financial regulator has said that the collapse of Signature Bank was caused by a run from a broad base of depositors across business sectors, not crypto.
Crypto-friendly Signature Bank was seized by federal regulators in March.
In a House Financial Services Committee hearing on stablecoins on April 18, New York State Department of Financial Services (NYDFS) Superintendent Adrienne Harris said “it is a misnomer that the failure of Signature Bank was related to crypto.”
According to an April 19 Bloomberg report, she said that depositors including wholesale food vendors, fiduciaries, trust accounts and law firms left the bank and caused the run.
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