A California judge has made a ruling to consolidate three investor lawsuits against Silvergate Bank, a now-defunct crypto bank, that involve the bankrupt crypto exchange FTX.
The three cases were brought against Silvergate by four former investors who claim that the bank aided and abetted FTX’s alleged misconduct, including processing illegitimate transfers of FTX customer funds to its sister trading firm Alameda Research.
The plaintiffs believe that Silvergate facilitated investor fraud through the collapsed crypto exchange. The order stated that the cases involve common questions of law and fact and that they are appropriate for consolidation.
The cases will remain separate from other federal cases against FTX and its founder, Sam Bankman-Fried, but will be combined by mutual agreement of the litigants.
Silvergate Bank had disclosed its plans to “voluntarily liquidate” assets and shut down operations in early March following a bank run.
Additionally, the bank was hit with a class-action suit in January for securities law violations. FTX filed for bankruptcy in November last year, and its collapse and the resultant crypto market crash created liquidity problems for Silvergate.
In a related development, New York state’s financial regulator has said that the collapse of Signature Bank was caused by a run from a broad base of depositors across business sectors, not crypto. Crypto-friendly Signature Bank was seized by federal regulators in March.
