Silvergate class action claims crypto bank responsible for some FTX losses

Silvergate FTX collapse class action lawsuit overview: 

• Who: José Tomás Sepúlveda Zuleta, Michael Lehrer and Tristan Newman filed a class action lawsuit against Silvergate Capital Corporation and its chief executive and risk officers. 
• Why: Zuleta, Lehrer and Newman claim Silvergate was complicit and responsible for some of the billions of dollars in losses debtors suffered due to the collapse of cryptocurrency exchange FTX. 
• Where: The class action lawsuit was filed in California federal court. 

Silvergate Bank and its chief executive and risk officers were complicit in and responsible for some of the billions of dollars in “fraudulent” losses debtors suffered following the collapse of cryptocurrency exchange FTX. 

Plaintiffs José Tomás Sepúlveda Zuleta, Michael Lehrer and Tristan Newman claim Silvergate “knowingly or negligently” allowed FTX to direct the deposits of its customers to the hedge fund Alameda Research, a “wholly separate entity” owned by  Sam Bankman-Fried, FTX co-founder and former CEO.

FTX “spectacularly imploded” last month, leaving millions of debtors with billions of dollars in losses, due to “rampant fraud” and “corporate malfeasance” that ultimately led to it entering Chapter 11 bankruptcy, according to the Silvergate class action. 

Zuleta, Lehrer and Newman argue Silvergate, which serves the cryptocurrency industry, violated its Know-Your-Customer (KYC) and Anti-Money Laundering (AML) regulatory obligations as a U.S. bank. 

“Silvergate and the individual defendants failed to fulfill their due diligence obligations by either failing to establish an adequate due diligence program or failing to properly execute that program,” the Silvergate class action states. 

Silvergate class action alleges negligence, fraud, unjust enrichment, civil conspiracy

Zuleta, Lehrer and Newman want to represent a nationwide class of individuals who, as of Nov. 11, 2022, had legal title to any fiat or cryptocurrency that was unable to be withdrawn from either the FTX US or FTX international platforms. 

They accuse Silvergate of negligence, unjust enrichment, fraud, civil conspiracy, fraudulent concealment and inducement and violations of California’s Unfair Competition Law. 

Zuleta, Lehrer and Newman demand a jury trial and request declaratory relief along with an award of compensatory and punitive damages for themselves and all class members. 

Consumers filed separate class action lawsuits last month against Bankman-Fried, along with Alameda Research CEO Caroline Ellison and FTX’s celebrity endorsers, over claims they deceived consumers into investing with FTX. 

Were you financially harmed by the FTX collapse? Let us know in the comments! 

The plaintiffs are represented by Jack Fitzgerald and Paul K. Joseph of Fitzgerald Joseph LLP, and Timothy G. Blood and Thomas J. O’Reardon II of Blood Hurst & O’Reardon LLP.

The Silvergate FTX collapse class action lawsuit is Zuleta, et al. v. Silvergate Capital Corporation, et al., Case No. 3:22-cv-01901, in the U.S. District Court for the Southern District of California.

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• FTX cryptocurrency exchange files for bankruptcy, investigates $500M theft
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