Plaintiffs demanding compensation for Silvergate’s demise have consolidated their litigation.
A California court has consolidated three investor cases against the defunct cryptocurrency bank Silvergate Bank over the failure of the FTX cryptocurrency exchange.
The United States District Judge for the Northern District of California, Jacqueline Scott Corley, ruled on April 19 that the three petitions would be consolidated.
Four former investors launched against Silvergate in three lawsuits. Law360 reported on April 19 that they will remain distinct from other federal cases against FTX and its founder Sam Bankman-Fried, but will be combined by mutual consent of the litigants.
The directive stated: “As the Silvergate lawsuits “name common defendants,” “arise from the same alleged course of conduct,” and “assert overlapping causes of action,” the courts have determined that they should be consolidated because “they involve common questions of law and fact.”
Plaintiffs said that Silvergate aided and abetted the alleged misconduct of FTX. Actions included processing unauthorized transfers of FTX customer funds to Alameda Research, a sister trading firm.
In November of last year, FTX filed for bankruptcy, and its collapse and the subsequent crypto market decline caused liquidity issues for Silvergate.
In a related development, the New York state financial regulator has stated that the failure of Signature Bank was caused by a flight by depositors from a variety of industries, not crypto.
In March, federal authorities seized the cryptocurrency-friendly Signature Bank. According to a Bloomberg report dated April 19, she stated that depositors, including food wholesalers, trust accounts, and law firms, fled the bank and caused the run.
Also Read: Hong Kong Court Accepts Crypto As Property
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