In Brief
- Silvergate is faced with a class-action lawsuit over its role with bankrupt FTX.
- The crypto bank shares has declined by more than 90%.
- Celebrity Shaquille O’Neal said he was only a spokesperson for FTX.
Leading crypto bank Silvergate was slammed by a class-action lawsuit from investors who invested in the collapsed FTX.
Joewy Gonzalez filed the Dec. 14 lawsuit for himself and others affected by the FTX’s failure. Gonzalez accused Silvergate of “aiding and abetting” the FTX fraud.
The plaintiff claimed that he invested his funds in FTX because the exchange promised to store their digital assets securely. He added that FTX promised to allow investors “cash (their funds) out, or trade them for other assets or financial products.”
Silvergate’s Role at FTX
According to the lawsuit, the crypto bank had a “plain sight” of the fraud at FTX but failed in its “duty of due diligence.” It continued that the ‘defendants breached their know-your-customer and anti-money laundering duties with respect to FTX/Alameda.”
Also, the plaintiff alleged that Silvergate participated in commingling funds, improper transfer, and lending out customers’ funds. It added that the bank accepted deposits of FTX investors that were wired straight to Alameda Research. Part of the lawsuit reads: Silvergate is liable for its role in furthering FTX’s investment fraud and breaches of fiduciary duty and is obligated under common law to make Plaintiff and the other investors whole.
Silvergate Shares Decline
Silvergate has seen the value of its shares rapidly decline in recent days following FTX’s implosion. BeinCrypto reported that the firm’s stock has plunged by 92.5% since its all-time high of $239. As of press time, it was trading for $18.57.
Meanwhile, the firm’s CEO Alan Lane has insisted that customer funds were safe despite the exposure to the embattled firms.
Several US lawmakers, led by Senator Elizabeth Warren, also recently wrote the bank to demand explanations for its relationship with FTX.
Shaq Says he was “a paid spokesperson” for FTX
In a separate development, Shaquille O’Neal revealed that he does not believe in crypto and he was only a paid spokesperson for the bankrupt firm, CNBC reported.
Shaq was named in a class-action lawsuit against the celebrities that promoted the crypto exchange.
According to the CNBC report, Shaq said he “was just a paid spokesperson for a commercial.”
Meanwhile, Shaq did not reveal how much he was paid for his appearance in the commercial.
Disclaimer
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.