Silvergate Faces Lawsuit for ‘Aiding and Abetting’ FTX Fraud

Leading crypto bank Silvergate was slammed by a class-action lawsuit from investors who invested in the collapsed FTX.

Joewy Gonzalez filed the Dec. 14 lawsuit for himself and others affected by the FTX’s failure. Gonzalez accused Silvergate of “aiding and abetting” the FTX fraud.

The plaintiff claimed that he invested his funds in FTX because the exchange promised to store their digital assets securely. He added that FTX promised to allow investors “cash (their funds) out, or trade them for other assets or financial products.”

According to the lawsuit, the crypto bank had a “plain sight” of the fraud at FTX but failed in its “duty of due diligence.” It continued that the ‘defendants breached their know-your-customer and anti-money laundering duties with respect to FTX/Alameda.”

Also, the plaintiff alleged that Silvergate participated in commingling funds, improper transfer, and lending out customers’ funds. It added that the bank accepted deposits of FTX investors that were wired straight to Alameda Research. Part of the lawsuit reads:

Silvergate is liable for its role in furthering FTX’s investment fraud and breaches of fiduciary duty and is obligated under common law to make Plaintiff and the other investors whole.

Silvergate Shares Decline

Silvergate has seen the value of its shares rapidly decline in recent days following FTX’s implosion. BeinCrypto reported that the firm’s stock has plunged by 92.5% since its all-time high of $239. As of press time, it was trading for $18.57.