On January 10, a class-action lawsuit was brought against Silvergate Capital, which is the parent corporation of Silvergate Bank and the operator of the Silvergate Exchange Network. The lawsuit was filed in the United States District Court for the Southern District of California.
Claiming that Silvergate violated the Securities Exchange Act of 1934, the lawsuit was brought on behalf of all buyers of Silvergate securities between November 9, 2021 and January 5, 2023. The litigation was filed on January 5, 2023.
In the lawsuit, defendants included not just the chief executive officer of Silvergate, Alan Lane, but also the chief financial officer, Antonio Martino.
The plaintiff in the lawsuit said that Silvergate’s technology failed to identify instances of money laundering in sums more than $425 million, which resulted in the firm being in a position where it was likely to suffer penalties from regulatory agencies.
In addition, the defendants were aware that the public papers and statements that had been produced or distributed in the name of the Company included materially inaccurate information and/or were deceptive.
A tweet sent by Marcus Aurelius Research on November 15 serves as the basis for the allegation that the corporation was complicit in the movement of $425 million to money launderers in South America.
A large drop in the price of Silvergate shares may have been caused, at least in part, by that tweet as well as the publication of the Bear Cave newsletter dated November 17 that referenced the same problem.
The share price fell even more when it was disclosed in a press statement issued by Silvergate that the bank’s digital asset deposits had plummeted by 68 percent in the last quarter of 2022, going from $11.9 billion to $3.8 billion.
The lawsuit contends that the class members might comprise at least hundreds or thousands of individuals, but their names have not yet been discovered. Silvergate shares are listed on the New York Stock Exchange. In recent months, Silvergate has been subjected to an increasing amount of pressure.
On December 14, a class-action lawsuit was filed against Silvergate for its claimed part in the transfer of monies from FTX user accounts to Alameda Research.