By
Chimamanda U. Martha
April 19th, 2024
Plaintiff Joewy Gonzalez has filed the lawsuit on behalf of himself and others who lost money with FTX. The lawsuit accuses Silvergate Bank of transferring FTX user deposits into the bank accounts of Alameda Research.
The contagion of FTX collapse has spread all across the crypto market with several other firms getting impacted in the process. Alan Lane, the CEO of Silvergate Bank, is now facing a class-action lawsuit at the California Southern District Court amid the bank’s business dealing with embattled crypto firms FTX and Alameda Research.
Silvergate Bank CEO and New Class Action Lawsuit
The lawsuit holds Silvergate Bank responsible for placing FTX user deposits into the bank accounts of Alameda Research. This transfer of customer funds at FTX was one of the major reasons behind the collapse of the crypto exchange. Eventually, both Alameda and FTX had to declare bankruptcy.
Plaintiff Joewy Gonzalez has filed the lawsuit on behalf of himself and others who were in the same situation. In the lawsuit, the plaintiff notes that he had invested in cryptocurrencies via the FTX exchange since 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 lawsuit blames Silvergate Bank for aiding FTX’s fraudulent activities via improper transfers, lending user funds and comingling funds. It also accuses Silvergate Bank of breaching its fiduciary duty. The lawsuit notes that Silvergate is liable for its role in “furthering FTX’s investment fraud”. It also notes that Silvergate has the obligation to return what they owe to the plaintiff and other investors. Girard Sharp and Hartley LLP shall be representing the plaintiffs in the case.
US Senators Question Silvergate Bank
Earlier this month, US senators also wrote a letter to Silvergate Bank demanding answers for their role in the loss of billions of dollars with the FTX collapse. Senator John Kennedy, Elizabeth Warren, and Roger Marshall had asked Alex Lane to provide details of Silvergate Bank’s business dealing with FTX. The letter from the senators wrote:
“Your bank’s involvement in the transfer of FTX customer funds to Alameda reveals what appears to be an egregious failure of your bank’s responsibility to monitor for and report suspicious financial activity carried out by its clients”.
Senator Warren further added that “Silvergate appears to be at the center of the improper transfer of billions in FTX customer funds. Americans need answers. Those guilty of wrongdoing must be held accountable”.