Silvergate Bank Offers $10M Settlement for FTX and Alameda Clients

TLDR

• Silvergate Bank faces a class-action lawsuit for aiding FTX and Alameda’s fraud.
• Affected clients of FTX and Alameda can file claims by January 30 for a $10M payout.
• Over 46,000 potential claimants could receive compensation from the settlement.
• Final approval hearing for the settlement is scheduled for February 9, 2025.

A class-action lawsuit filed against Silvergate Bank in California is inviting clients who deposited fiat into FTX or Alameda Research-related accounts between 2019 and 2022 to submit claims for a proposed $10 million settlement. The settlement aims to resolve allegations that Silvergate Bank, its parent company Silvergate Capital Corporation, and CEO Alan J. Lane were involved in aiding and abetting the fraudulent activities of FTX, Alameda Research, and Sam Bankman-Fried.

The settlement is expected to provide additional relief for affected parties beyond the ongoing FTX bankruptcy proceedings. It is designed to offer compensation to clients who were affected by the multi-billion-dollar collapse of FTX in late 2022. Interested parties must submit their claims by January 30, 2025, or choose to opt out of the settlement.

Settlement Overview and Legal Background

The class-action lawsuit, filed in the US District Court for the Southern District of California, alleges that Silvergate Bank played a role in the fraudulent actions of FTX and Alameda Research. Court documents suggest that the proposed settlement is fair and reasonable, offering an alternative route for recovery for those impacted by FTX’s collapse.

According to a court filing made on December 8, the settlement is seen as a significant recovery for affected parties. The filing also highlights that it provides relief beyond what claimants might receive in the ongoing FTX bankruptcy proceedings. The settlement has the potential to benefit over 46,000 individuals involved in the broader FTX case.

Judge Ruth Bermudez Montenegro has set a final hearing date for February 9, 2025, to approve or modify the settlement. All potential claimants have until January 30, 2025, to decide whether to file a claim or opt out of the settlement. Should the settlement be approved, affected individuals will receive compensation, which is expected to be distributed proportionally based on the number of claimants involved.

Who Can File Claims and Key Dates

Claimants eligible to file claims under the settlement are individuals who deposited fiat currency into FTX or Alameda Research-related accounts between 2019 and 2022. These individuals must submit their claims by January 30, 2025, to be considered for compensation.

For those wishing to opt out of the settlement, January 30, 2025, also marks the deadline to do so. Affected parties should review their eligibility carefully before making a decision. The settlement’s final approval hearing will take place on February 9, 2025. If approved, funds from the settlement will be distributed among the claimants, with each payout being proportional to the claimant’s involvement in the case.

FTX’s Collapse and Silvergate Bank’s Role

Silvergate Bank, which was one of the few crypto-friendly banks operating in the US, had strong ties to FTX and Alameda Research at the time of their collapse. These ties are central to the class-action lawsuit and the subsequent settlement. The lawsuit contends that Silvergate Bank, through its banking operations, played a role in facilitating the fraudulent activities of FTX and its affiliates, contributing to the exchange’s eventual bankruptcy.

After the collapse of FTX in November 2022, Silvergate Bank began winding down its operations and eventually shut down in March 2023. The closure of Silvergate Bank marked the end of a significant player in the crypto-banking sector, especially in relation to FTX, which had relied on the bank for its operations.

Future of Legal Proceedings

While most criminal cases tied to FTX and its executives have concluded, there are still civil matters being addressed in various courts. Sam Bankman-Fried, the former CEO of FTX, and Caroline Ellison, the former CEO of Alameda Research, are serving prison sentences for their involvement in the collapse of the exchange. Additionally, legal proceedings are ongoing for other individuals connected to FTX.

In the meantime, affected clients of FTX and Alameda Research, who were impacted by the actions of Silvergate Bank, now have an opportunity to seek additional compensation through this proposed settlement.

The final decision on the settlement will come on February 9, 2025, when the court will assess the fairness and adequacy of the agreement before giving it final approval.

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