04-20-2023 icon

Several Silvergate Lawsuits Over Connection to FTX Combined by Jurist 

By Lucy Adegbe

A California-based jurist has merged three distinct investor cases filed against the currently inoperative digital currency bank Silvergate implicating the insolvent digital currency trading platform FTX. 

On Wednesday, United States regional jurist Jacqueline Scott Corley of the North region of California ordered that the distinct cases be combined. The three investors filing charged Silvergate for aiding investor scam by the defunct digital currency trading platform FTX. 

The three proceedings were filed against the digital currency bank by four previous investors. They are to be kept separate from other national filings against FTX and its owner Sam Bankman-Fried, however, will be merged upon joint consent from the complainants, as outlined in a Wednesday statement from Law360.

The complainants claim that Silvergate facilitated and encouraged FTX’s supposed unlawful behavior. Some of these behaviours consisted of conducting illegal withdrawal transactions of FTX users’ assets to its affiliated exchange company Alameda Research. 

Silvergate revealed its agenda to willingly liquidate reserves and halt service activities in the earlier periods of March due to massive customer withdrawals. Also, the bank was confronted by class action charges in the first month of the year over securities ruling infringement. 

FTX, on the other hand, signed up for Chapter 11 in November 2022 and its crash, alongside the resultant digital currency market tumble, paved the way for a liquidity challenge for Silvergate.