Silvergate Capital & CEO Accused of Involvement in $8B Crypto Fraud

Posted on by

FTX Crypto Fraud

• Soham Bhatia has filed a class action lawsuit against Silvergate Bank and its parent company, Silvergate Capital Corporation for their alleged role in aiding and abetting the fraudulent scheme orchestrated by Sam Bankman-Fried (SBF) through FTX and Alameda Research.
• Silvergate Exchange Network (SEN) allowed FTX to have a 24/7 crypto-fiat exchange, and therefore, Silvergate was complicit in FTX’s fraudulent activity.
• Over $8 billion of customers‘ funds were lost as a result of mismanagement by FTX and Alameda.

Silvergate Capital Market Outlook

Despite investigations into FTX, Silvergate Capital has attracted notable institutional investors such as Citadel Securities, who purchased a 5.5% stake in the company worth approximately $25 million, and BlackRock who announced a 7.2% stake in Silvergate Capital at the end of 2020. On Tuesday, SI shares gained over 18%, closing the day’s trading at $17.36.

Class Action Lawsuit Against Silvergate

Soham Bhatia is one of the millions of FTX customers whose funds have been locked following the defunct cryptocurrency exchange’s involvement in a multibillion-dollar fraudulent scheme. He has taken extra steps by filing a class action complaint against Silvergate Bank and its parent company, Silvergate Capital Corporation for their alleged role in aiding and abetting the fraudulent scheme orchestrated by Sam Bankman-Fried (SBF) through FTX and Alameda Research. Bhatia has accused Alan J. Lane (CEO of Silvergate) of knowingly assisting SBF in laundering billions of fraudulent assets through SEN which allowed FTX to have a 24/7 crypto-fiat exchange thus making them complicit with this fraud activity.

Loss Of Funds

FTX transferred billions of users‘ digital assets to Alameda which were later used to pay for their debts resulting in an estimated loss of over $8 billion which may never be recovered due to mismanagement from both parties involved i.e., FTX & Alameda research .

Federal Reserve Rules Applicable To Both Parties

Both Soham Bhatia & The CEO of silver gate are subject to rules laid down by Federal Reserve Bank Of California .