In the wake of FTX cryptocurrency fraud, investors claim Silvergate Bank misled the public about its customer vetting and anti-money laundering programs.
Subsequent run on the bank led to Silvergate Bank’s demise and Silvergate Capital’s bankruptcy.
SAN DIEGO, Sept. 03, 2025 (GLOBE NEWSWIRE) -- Today, a federal judge in California granted final approval of a $37.5 million cash settlement between investors and Silvergate Capital Corporation, the holding company for Silvergate Bank, resolving a securities fraud class action against the bank. A premier banking service provider to cryptocurrency platforms, Silvergate Bank allegedly made materially false and misleading statements about the integrity of the bank’s compliance framework, particularly its customer monitoring and anti-money laundering assurance programs.
Originally filed on December 7, 2022, Silvergate investors’ complaint claimed they incurred significant losses beginning in November 2022 as the truth emerged about the bank’s lax customer vetting and monitoring program – a critical bank safeguard to prevent exposure to money laundering and criminal activity. Then, on January 5, 2023, Silvergate disclosed that the collapse of FTX, one of its largest clients, had led to a run on the bank, causing its deposits to decline by $8.1 billion – more than 68% – over a three-month period. As a result, Silvergate was forced to sell off illiquid securities for a loss of more than $700 million and to borrow $4.3 billion from Federal Home Loan Banks to address its massive liquidity crunch. Eventually, Silvergate Capital filed for bankruptcy.
“In light of Silvergate Capital’s bankruptcy, the settlement is a highly favorable resolution that ensures an immediate recovery for impacted investors,” said Carol Gilden, a partner at Cohen Milstein and court-appointed co-lead counsel in this matter. “We are proud that the pension and union funds we represented had the resolve to step forward on behalf of investors and demand accountability from Silvergate Capital.”
As a federally regulated bank, Silvergate was subject to anti-terrorism and anti-money laundering regulations in accordance with the Bank Secrecy Act and the USA PATRIOT Act.
Investors claimed that Silverglate did not vet, perform due diligence on, or monitor its clients who participated on its one-of-a-kind service called the Silvergate Exchange Network (SEN), which allowed Silvergate customers to send U.S. dollars and euros between eligible counterparty SEN accounts at any time of day using the bank’s programming interface. SEN Network participants included FTX, Alameda, Binance.US, Huobi Global, and other cryptocurrency platforms which were subsequently investigated, shut down, fined or in bankruptcy due to money laundering allegations.
On February 28, 2023, the court appointed Cohen Milstein and Bernstein Litowitz, jointly, as Lead Counsel. The court also appointed, as Lead Plaintiffs, Indiana Public Retirement System, Boston Retirement System, Public School Teachers’ Pension & Retirement Fund of Chicago, International Union of Operating Engineers, Local No. 793, Members Pension Benefit Trust of Ontario, UMC Benefit Board, Inc., and Wespath Institutional Investments LLC., as administrative trustees of the Wespath Funds Trust. The case is styled: In re Silvergate Capital Corporation Securities Litigation, Case No. 3:22-cv-01936-JES-MSB, U.S. District Court, Southern District of California.
About Cohen Milstein Sellers & Toll PLLC
Cohen Milstein Sellers & Toll PLLC, a premier U.S. plaintiffs’ law firm, with over 100 attorneys across eight offices, champions the causes of investors, along with consumers, small business owners, workers and whistleblowers – working to deliver corporate reforms and fair markets for the common good. For more information visit https://www.cohenmilstein.com.
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