Decision Made in the Case Against Silvergate Bank by FTX Users

Silvergate Bank came face to face with a lawsuit brought by FTX users, alleging that the bank assisted in the fraudulent activities of FTX and Alameda Research. Judge Ruth Bermudez Montenegro rejected Silvergate’s motion to dismiss the lawsuit, finding the arguments of the class claiming that the bank was aware of FTX’s fraudulent activities and used it for their own benefit to be sufficient. Relationship between Silvergate and FTX The court ruled that the Silvergate Exchange Network provided benefits to FTX customers and that Silvergate had an obligation to care for FTX customers. Judge Montenegro noted that Silvergate facilitated banking transactions with FTX and Alameda, allowing deposits by enabling the transfer of funds to Alameda accounts. It is stated that Silvergate experienced a significant increase in revenue through conversion fees and interest from FTX customers, with the bank’s annual revenue rising from $7.6 million to $75.5 million following FTX. Details […]

Decision Made in the Case Against Silvergate Bank by FTX Users

Silvergate Bank came face to face with a lawsuit brought by FTX users, alleging that the bank assisted in the fraudulent activities of FTX and Alameda Research. Judge Ruth Bermudez Montenegro rejected Silvergate’s motion to dismiss the lawsuit, finding the arguments of the class claiming that the bank was aware of FTX’s fraudulent activities and used it for their own benefit to be sufficient.

Relationship between Silvergate and FTX

The court ruled that the Silvergate Exchange Network provided benefits to FTX customers and that Silvergate had an obligation to care for FTX customers. Judge Montenegro noted that Silvergate facilitated banking transactions with FTX and Alameda, allowing deposits by enabling the transfer of funds to Alameda accounts.

It is stated that Silvergate experienced a significant increase in revenue through conversion fees and interest from FTX customers, with the bank’s annual revenue rising from $7.6 million to $75.5 million following FTX.

Details and Outcomes of the Case

In the bank’s motion to dismiss the lawsuit, it was argued that there was no obligation to care for FTX customers and that any problems that arose were the fault of FTX and Sam Bankman-Fried. However, the judge found this argument insufficient, citing Silvergate’s status as one of the few banks serving the crypto industry.

Consolidated class-action lawsuits against Silvergate Bank began in April and the decision in this case came months after FTX’s bankruptcy and Silvergate’s own bankruptcy. Bankman-Fried was found guilty of fraud and money laundering charges and was sentenced on March 28.

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