SBF and FTX fraud 'aided and abetted' by Silvergate Bank, alleges lawsuit

Silvergate Bank and its CEO Alan Lane have been accused of “aiding and abetting” a “multibillion-dollar fraudulent scheme orchestrated by Sam Bankman-Fried (SBF)” and two of his entities, FTX and Alameda Research, in a newly proposed class action lawsuit.

The proposed class-action lawsuit was filed in the United States District Court of the Northern District of California on Feb. 14 by lawyers representing a San Francisco-based FTX user who — just like all other FTX customers — was frozen out of around $20,000 in crypto when the exchange collapsed last year.

Plaintiff Soham Bhatia alleges that Silvergate Bank, its parent company Silvergate Capital Corporation and CEO Alan Lane were aware of the use of FTX customer funds by Alameda Research and has accused them of concealing “the true nature of FTX” from its customers.

“At all relevant times, Silvergate, Bankman-Fried and Lane were each co-conspirators of the other,” according to the lawsuit, adding:

Silvergate $SI is now the most shorted stock (73% of float)Yep the bank who according to the class-action lawsuit directly „aided and abetted FTX’s fraud“ pic.twitter.com/k2zSb41pgD

— Yoda Research (@YodaResearch) February 14, 2023

Silvergate and Lane aided and abetted, encouraged and substantially assisted Bankman-Fried in jointly perpetrating a fraudulent scheme upon Plaintiff and the class.

“By aiding, abetting, encouraging and substantially assisting the wrongful acts, omissions and other misconduct alleged above, Defendants acted with an awareness of their wrongdoing and realized that their conduct would substantially aid the accomplishment of their illegal design.”

The suit seeks a combination of damages, restitution and disgorgement of profits with the amount to be determined in trial.

However, the lawsuit is yet to be certified by the district court, which is a necessary step before it can proceed as a class action.

Related: Crypto bank Silvergate ranks as the second- most-shorted stock on Wall Street

The latest proposed lawsuit is just another class-action complaint filed against Silvergate over the last two months.

On Dec. 14, plaintiff Joewy Gonzalez filed a similar class-action suit in the California Southern District Court — accusing Silvergate of its alleged role in “furthering FTX’s investment fraud” by aiding and abetting the crypto exchange when it placed FTX user deposits into the bank accounts of Alameda.

On Jan. 10, a class-action suit was filed against Silvergate Capital Corporation in the United States District Court of Southern California alleging that Silvergate’s platform failed to detect occurrences of money laundering “in amounts exceeding $425 million” involving South American money launderers.

On Feb. 6, algorithmic trading firm Statistica Capital filed a putative class-action lawsuit against Signature Bank alleging it had “actual knowledge of and substantially facilitated the now-infamous FTX fraud.”

We have to read a bit, but this is a very clear description of the role of Signature Bank, the FTX-Alameda intertwining of funds and all that. It takes industry insiders to reveal the internal dynamics and this is what happens here. https://t.co/0DCcYPUDlT

— Simon Lelieveldt - [email protected] (@finhstamsterdam) February 13, 2023

“In particular, Signature knew of and permitted the commingling of FTX customer funds within its proprietary, blockchain-based payments network, Signet,” it wrote.

Cointelegraph has reached out to Silvergate for comment but did not receive a response at the time of publication.