Silvergate Bank faces lawsuit over FTX and Alameda dealings

Crypto bank Silvergate has been hit with a class action lawsuit, alleging that it aided and abetted fraud carried out by FTX and its subsidiary Alameda Research.

The lawsuit was filed by Joewy Gonzalez “on behalf of all others similarly situated”, in which it is claimed that Silvergate “aided and abetted” FTX in fraud and breaches of fiduciary duty.

The complaint claims that Silvergate processed billions in transfers between the FTX client account on its platform and Alameda accounts. It also accuses Silvergate of accepting deposits from FTX investors which were fraudulently sent to Alameda to be misused.

In a direct quote in the complaint it was alleged that Sam Bankman-Fried, the then CEO of FTX, told a reporter that he had forgotten about the “improper transfers” until the collapse of his company. He was quoted as saying:

“it looks like people wired $8b to Alameda and ‘oh god we basically forgot about the stub account that corresponded to that so it was never delivered to FTX.’” 

Elsewhere in the lawsuit the plaintiff accuses FTX of pursuing an “aggressive, celebrity-fueled marketing campaign”, and listing the following sporting partnerships:

“sports and entertainment figures such as Tom Brady, Gisele Bundchen, Shaquille O’Neal, Steph Curry, and others. FTX also obtained the naming rights to the Miami Heat’s venue, and formalized a partnership with the Golden State Warriors.” 

The lawsuit alleges that Silvergate is liable for its part in the FTX investment fraud, and for its breaches of fiduciary duty. The claim asks that Silvergate be “obligated under common law to make Plaintiff and the other investors whole.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.