Parent company of Silvergate Bank consents to a $37.5 million class-action settlement
Silvergate Capital Corp Settles Securities Class Action Lawsuit for $37.5 Million
Silvergate Capital Corp (SCC) has agreed to a $37.5 million settlement in a securities class action lawsuit, according to court documents. The lawsuit alleges that the company made materially false and misleading statements about its compliance controls, particularly related to anti-money laundering and customer identification programs.
The lawsuit claims that SCC misled investors by promoting itself as a premier crypto bank with strong risk controls, while allegedly ignoring serious red flags connected to its client FTX. Following FTX's downfall, Silvergate’s stock dropped over 99%, and the company disclosed internal control weaknesses, delayed financial filings, and eventually filed for bankruptcy.
The settlement resolves claims arising from these allegations that investors were misled about Silvergate’s risk management and regulatory compliance. It also resolves allegations that Silvergate misled investors regarding the impact of FTX's November 2022 collapse on its financial position.
The settlement does not include any admission of liability or wrongdoing from the executives involved, including former CEO Alan Lane and former finance chief Antonio Martino. The executives have entered the settlement to avoid the risk, burden, and expense of continued litigation.
The settlement was preliminarily approved by a court in the Southern District of California in mid-2025, with a deadline for investors to submit claims to receive payouts related to this $37.5 million settlement. The suit also involved claims against Silvergate’s underwriters and certain executives concerning the sale of $1.3 billion of securities.
The settlement may have implications for the financial position of the executives involved. It is also expected to impact the resolution of the class-action lawsuit against SCC. The settlement allows SCC to focus on moving forward with its Chapter 11 proceedings, and it removes numerous barriers to confirmation, which is a significant step towards resuming the process of confirming a chapter 11 plan.
Additionally, the settlement resolves litigation over how Silvergate will assign director and officer insurance proceeds. Silvergate's subsidiary Silvergate Bank began voluntary winding down in 2023, just months after FTX's own bankruptcy.
The trendline does not provide specific facts about the news article. However, it is clear that the settlement aims to increase the value available to other estate constituents and to minimise litigation risk and exposure for the Indemnified Individuals. No comment was provided by an attorney for SCC regarding the settlement.
- Despite the settlement, there was no admission of liability or wrongdoing from Silvergate Capital Corp's former CEO Alan Lane, former finance chief Antonio Martino, or other executives involved in the securities class action lawsuit.
- The financial services industry, particularly banking-and-insurance and fintech companies, may pay closer attention to Silvergate Capital Corp's case, as the settlement has significant implications for regulatory compliance and risk management in the business and finance sector.
