Securities Regulation Daily Wrap Up, BLOCKCHAIN—S.D. Cal.: FTX customers seek approval of $10M settlement with Silvergate, (Dec 10, 2025)
FTX customers alleged that transfers by Silvergate facilitated diversion of funds in the multi-billion-dollar FTX fraud.
A class of FTX customers have asked a federal district court to approve a $10 million settlement with Silvergate Bank, Silvergate Capital Corporation, and former CEO Alan Lane, calling it a “superior alternative to continued litigation.” The plaintiffs alleged that the now-bankrupt Silvergate entities enabled multi-billion-dollar fraud by FTX founder Sam Bankman-Fried (In re Silvergate Capital Corporation, No. 3:23-cv-01406-RBM-BLM (S.D. Cal. Dec. 8, 2025)).
Given “an uncertain road ahead,” the plaintiffs said the settlement “marks a significant recovery from the bankrupt Silvergate and will provide additional relief, beyond that obtained in the FTX Bankruptcy, for those affected by the multi-billion-dollar collapse of the FTX cryptocurrency exchange.”
The class is a subclass of FTX customers whose payments to FTX were sent or deposited into one of the FTX-affiliated accounts at Silvergate Bank.
If approved, the settlement will result in pro rata payments after outreach to over 46,000 potential class members. The court preliminarily approved the settlement on October 21.
Silvergate and FTX. According to the complaint, companies controlled by Bankman-Fried accounted for almost 10 percent of Silvergate’s business. More broadly, cryptocurrency business accounted for as much as 99 percent of Silvergate’s business and fueled the bank’s rapid rise from a small regional bank to a national bank with more than $12 billion in deposits.
The complaint alleged that Silvergate knew that FTX customer money was being deposited in accounts at Silvergate titled in the names of other companies under SBF’s control, but executed the transfers anyway. As alleged, Silvergate continued executing transfers even after SBF and his entourage moved offshore to evade U.S. government oversight, and despite numerous unexplained related party transactions and other red flags.
According to the complaint, customer money was allegedly diverted and dissipated as part of the FTX scheme. When news got out, there was a run on Silvergate deposits, leading to Silvergate recording a $1 billion loss and entering voluntary liquidation.
This is case No. 3:23-cv-01406-RBM-BLM.
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