A class-action lawsuit filed against Silvergate Bank in California has opened its doors for clients who deposited fiat currency into FTX or Alameda Research-related accounts from 2019 to 2022 to claim a proposed $10 million settlement. This settlement seeks to rectify allegations that Silvergate Bank, along with its parent company Silvergate Capital Corporation and CEO Alan J. Lane, facilitated the fraudulent operations of FTX, Alameda Research, and its infamous founder Sam Bankman-Fried.
The proposed settlement intends to provide much-needed relief to those affected, supplementing the ongoing FTX bankruptcy proceedings. Clients impacted by the disastrous collapse of FTX in late 2022 are encouraged to submit their claims by January 30, 2025, or may choose to opt out of the settlement altogether.
Understanding the Settlement and Legal Context
Filed in the US District Court for the Southern District of California, the class-action lawsuit asserts that Silvergate Bank played a significant role in the malpractices of FTX and Alameda Research. According to court documents, this settlement is viewed as a fair and reasonable method of recovery for those affected by FTX’s collapse.
The December 8 court filing emphasizes the settlement as a substantial recovery avenue, presenting advantages beyond those available in the ongoing FTX bankruptcy process. This settlement could benefit over 46,000 individuals entangled in the wider FTX scandal.
Judge Ruth Bermudez Montenegro has scheduled a final hearing for February 9, 2025, to either approve or modify the settlement terms. All potential claimants must finalize their claims or opt-out decisions by January 30, 2025. If the settlement receives judicial approval, compensation will be distributed proportionally among claimants based on their involvement.
Eligibility and Important Deadlines
Individuals eligible to file claims under this settlement include those who deposited fiat into FTX or Alameda Research-related accounts between 2019 and 2022. Claims must be submitted by the January 30, 2025 deadline to qualify for compensation.
Those opting to withdraw from the settlement should also do so by January 30, 2025. Claimants should carefully assess their eligibility prior to making a decision. The final approval hearing will convene on February 9, 2025, where the court will determine an equitable distribution of the settlement funds.
Examining FTX’s Collapse and Silvergate’s Role
Silvergate Bank previously served as one of the few crypto-friendly financial institutions in the US, maintaining strong associations with FTX and Alameda Research during their operational peak. Central to the class-action lawsuit, these ties implicate Silvergate Bank in facilitating a range of illicit activities associated with FTX, which ultimately resulted in the exchange’s catastrophic fall.
Following the November 2022 demise of FTX, Silvergate Bank proceeded to scale down its operations and ultimately closed its doors in March 2023. This marked a significant decline for a key player within the crypto-banking sector, which previously upheld critical support for FTX’s functions.
Continuing Legal Matters
While most criminal proceedings against FTX executives have reached their conclusions, several civil suits remain underway in various jurisdictions. Sam Bankman-Fried and Caroline Ellison, former CEO of Alameda Research, are currently serving prison sentences due to their involvement in FTX’s downfall. Active legal proceedings are still ongoing against additional individuals associated with FTX.
Meanwhile, affected clients of FTX and Alameda Research, affected by Silvergate Bank’s actions, now have an additional chance to pursue compensation via this proposed settlement. The final word on this settlement will arrive on February 9, 2025, as the court evaluates the settlement’s fairness and adequacy.
