According to breaking information from Bloomberg, the SEC filed a securities fraud lawsuit against cryptocurrency-focused Silvergate Bank.
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Silvergate Capital, a California-based lender, alleging securities fraud. The case comes in connection with the collapse of cryptocurrency exchange FTX, which had significant ties to Silvergate.
The SEC filed the lawsuit in a federal court in Manhattan, according to a filing entry filed today. The introduction lists “securities fraud” as the cause of action, but provides no further details about the case. Several former executives of Silvergate were also named as defendants in the lawsuit.
Silvergate was one of the few traditional banks that decided to do business with the digital asset industry while it was still in its infancy. However, this decision led to the bank being deeply involved in the cryptocurrency industry meltdown occurring in late 2022 and 2023.
The bank had gained a foothold by operating one of the few payment systems that enable investors and digital asset companies to convert their US dollar deposits into digital assets. However, the collapse of FTX, which had a significant place in the crypto exchange market, had a serious impact on Silvergate's operations.
Silvergate Bank's lawsuit by the SEC stems from its role in FTX and its lack of compliance with crypto-related transactions.
*This is not investment advice.