A United States District Judge has consolidated three lawsuits against Silvergate Bank that allege the bank aided investors in facilitating fraud by FTX, a now-collapsed cryptocurrency exchange. Former investors Matson Magleby, Golam Sakline, Nicole Keane, and Sonam Bhatia filed the lawsuits in February.
The parties have agreed to consolidate these cases because they involve common questions of law and fact and assert overlapping causes of action. The cases will be heard together and will not be merged with other federal cases against FTX and its founder, Sam Bankman-Fried.
The lawsuits allege that Silvergate Bank aided FTX in its illegal activities, including the transfer of unaccounted funds to Alameda Research. Silvergate Bank has been a prominent bank for cryptocurrency companies, along with New York-based Signature Bank. FTX was one of Silvergate’s major clients, and the bank announced its decision to liquidate and wind down operations on March 8, 2023.
According to the court order,
“The Silvergate cases involve common questions of law and fact, as they name common defendants, arise from the same alleged course of conduct, and assert overlapping causes of action, such that the Silvergate cases are appropriate for consolidation.”
The consolidation of these lawsuits is another example of the increased scrutiny that cryptocurrency companies and their associated financial institutions are facing from regulators and investors. As cryptocurrency continues to gain in popularity, it is likely that we will see more cases like this in the future.
In conclusion, the consolidation of these lawsuits against Silvergate Bank, alleging a connection to FTX, highlights the need for greater transparency and accountability in the cryptocurrency industry. As regulators continue to grapple with the challenges posed by this emerging industry, it is important that companies and investors work together to promote responsible and ethical practices.