A California court has consolidated three investor cases against the collapsed crypto bank Silvergate Bank including the crypto exchange FTX.
Four former investors filed three lawsuits against Silvergate. According to an April 19 Law360 report, the lawsuits of Matson Magleby, Golam Sakline, Nicole Keane, and Sonam Bhatia will stay distinct from other federal proceedings against FTX and its founder Sam Bankman-Fried but will be joined by mutual consent of the claimants. Three lawsuits were filed in February.
The three cases will be momentous, according to United States District Judge Jacqueline Scott Corley of the Northern District of California. Each accuses Silvergate of facilitating investor fraud via the defunct crypto exchange FTX.
“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 order said.
The plaintiffs claim that Silvergate assisted and facilitated FTXs significant wrongdoing. Processing unlawful transfers of FTX client monies to its sibling trading company Alameda Research was among the actions taken.
FTX declared bankruptcy in November of last year, and the subsequent crypto market slump exacerbated liquidity issues for Silvergate.
Federal officials seized the crypto-friendly Signature Bank in March. The failure of Signature Bank was prompted by a run from a wide base of depositors across economic sectors, according to New York states banking regulator.
After a bank run, Silvergate announced intentions to voluntarily liquidate assets and cease operations in early March. In addition, the bank was slammed with a class-action complaint about securities law breaches in January.
In a similar issue, owing to worries over unregistered securities, Taylor Swift represents a $100 million sponsorship arrangement with FTX. The ruling drew attention from the cryptocurrency community. According to a lawyer conducting a class-action case against numerous FTX promoters, Swift was the lone celebrity to query the crypto exchange. The continuing case against FTXs celebrity endorsers seeks restitution for consumers who lost money when the firm declared bankruptcy.
In late March, Sam Bankman-Fried pleaded not guilty to charges of seeking to dodge campaign funding restrictions. He already pleaded not guilty to eight charges of fraud and conspiracy, and his trial is set for October.