Court Approves $37.5M Cash Settlement With Silvergate Capital Corporation in Securities Fraud Class Action

Core Viewpoint - Silvergate Bank misled investors regarding its customer vetting and anti-money laundering programs, leading to significant financial losses and the eventual bankruptcy of Silvergate Capital [1][2][3]. Group 1: Legal Settlement - A federal judge approved a $37.5 million cash settlement between investors and Silvergate Capital, resolving a securities fraud class action against the bank [2]. - The settlement is viewed as a favorable resolution for impacted investors, ensuring immediate recovery [4]. Group 2: Financial Impact - Investors claimed significant losses began in November 2022 as the truth about Silvergate's lax customer monitoring emerged [3]. - Following the collapse of FTX, Silvergate's deposits declined by $8.1 billion, representing a decrease of over 68% within three months [3]. - Silvergate was forced to sell illiquid securities at a loss exceeding $700 million and borrowed $4.3 billion from Federal Home Loan Banks to address liquidity issues [3]. Group 3: Regulatory Compliance - Silvergate Bank was subject to anti-terrorism and anti-money laundering regulations under the Bank Secrecy Act and the USA PATRIOT Act [4]. - Investors alleged that Silvergate failed to perform due diligence on clients using its Silvergate Exchange Network (SEN), which facilitated transactions among cryptocurrency platforms [5]. Group 4: Legal Proceedings - The case was originally filed on December 7, 2022, and the court appointed Cohen Milstein and Bernstein Litowitz as Lead Counsel on February 28, 2023 [3][6]. - Various public retirement systems and pension funds were appointed as Lead Plaintiffs in the case [6].