The paranoia following the FTX collapse did not seem to stop as another update surfaced recently. It is related to the US banking firm, Silvergate, which is said to have close ties with the crypto exchange. Earlier a lawsuit filing against the bank was reported citing the relation with FTX. Now the bank seems to face the consequence as the stock price slumped up to 9%.
According to several reports, the Silvergate stock price traded around it’s all time low.
Earlier class action lawsuit was reported to be filed against Silvergate Bank, Silvergate Capital Corporation and CEO Alan Lane. The lawsuit seeks to hold Silvergate liable for its alleged responsibilities in transferring FTX customer money into Alameda’s bank accounts, which sparked panic in the cryptocurrency market and ultimately resulted in both companies filing for bankruptcy.
The plaintiff named Joewy Gonzalez brought the claim on his own behalf and those of others who shared his circumstances. The lawsuit claims that the plaintiff used the FTX exchange to invest his savings in cryptocurrencies since the platform assured users that they could “keep assets securely as they rose in value, pay them out or trade them for other assets.”
The lawsuit claims that Silvergate improperly transferred funds, lent user funds, and mixed funds in order to facilitate FTX’s fraudulent activities and the exchanges’ violations of fiduciary duty. In accordance with the complaint, Silvergate is responsible for “furthering FTX’s investment scam” and is required to repay the plaintiff and other investors what they are owed.
Girard Sharp and Hartley LLP is the plaintiff’s legal counsel. The defense attorney for the defendants hasn’t yet shown up, on the other hand, as of this writing.
Three US senators issued a letter to Silvergate on December 6 asking for information on the company’s involvement in the billions of dollars in losses during the FTX collapse. Senators John Kennedy, Elizabeth Warren, and Roger Marshall urged Lane to elaborate on the company’s ties with FTX.
While this is going on, FTX’s legal team has lately asked for authorization to sell off FTX Europe, FTX Japan, its derivatives exchange LedgerX, and Embed, a stock-clearing platform. The value of the assets is at stake since the businesses are subject to regulatory pressure, say the attorneys, and this justifies using an “expeditious selling process.”
Source: https://www.thecoinrepublic.com/2022/12/20/did-lawsuit-against-silvergate-result-in-stock-price-drop/