Overview
| Settlement Notice: On May 22, 2025, Judge James Edward Simmons Jr. of the United States District Court for the Southern District of California granted preliminary approval of a $37.5 million settlement. If you are a member of the Settlement Class, your rights will be affected and you may be eligible for a payment from the settlement. The Settlement Class consists of: (a) all persons and entities who purchased or otherwise acquired the publicly traded common stock of Silvergate Capital from November 7, 2019 through March 21, 2023, inclusive, and were damaged thereby, and (b) all persons and entities who purchased Silvergate Capital securities in and/or traceable to any of Silvergate Capital’s securities offerings during 2021, and were damaged thereby. Certain persons and entities are excluded from the Settlement Class by definition (see paragraph 16 of the Notice) or may request exclusion pursuant to the instructions set forth in the Notice (see paragraph 44 of the Notice). Please read the Notice to fully understand your rights and options. Copies of the Notice and Claim Form can be found in the Case Documents list on the bottom of this page. You may also visit the case website, www.SilvergateSecuritiesLitigation.com, for more information about the settlement. To be eligible to receive a payment under the proposed settlement, you must submit a Claim Form postmarked (if mailed) or submitted on-line by no later than October 21, 2025. Payments to eligible claimants will be made only if the court grants final approval to the settlement and a plan of allocation, and only after any appeals are resolved, and after the completion of all claims processing. Please be patient, as this process will take some time to complete. Do NOT contact the court. |
Cohen Milstein and Bernstein Litowitz, jointly, as Lead Counsel, represent investors in this putative securities class action against Silvergate Capital Corporation, a holding company for Silvergate Bank, which during the class period was a federally regulated depository and lender for major cryptocurrency platforms, including Coinbase, Genesis, and FTX. Silvergate Investors allege that Silvergate made materially false and misleading statements about the Company’s compliance framework, as well as its anti-money laundering and customer identification programs.
Specifically, Silvergate investors claim that they incurred significant losses, beginning on November 7, 2022, as the truth began to come out that Silvergate Bank’s compliance practices were essentially lax and that it did not perform the vetting, due diligence and monitoring of clients claimed and exposed the Company to potential money laundering and criminal activity. Then, on January 5, 2023, Silvergate disclosed that the collapse of its client, FTX, had led to a run on Silvergate Bank, causing its deposits to decline by $8.1 billion, or over 68%, over the three months ending in December 2022. This led to an acute liquidity crunch, which forced Silvergate to sell off illiquid securities for a loss of over $700 million and to borrow $4.3 billion in short-term advances from Federal Home Loan Banks.
Important Rulings
- On May 22, 2025, Judge James Edward Simmons Jr. of the United States District Court for the Southern District of California granted preliminary approval of a $37.5 million settlement.
- On February 28, 2023, the court appointed Cohen Milstein and Bernstein Litowitz, jointly, as Lead Counsel in this securities class action. In the same order, the court appointed International Union of Operating Engineers, Local No. 793, Members Pension Benefit Trust of Ontario, UMC Benefit Board, Inc. and Wespath Institutional Investments LLC, both as administrative trustees of the Wespath Funds Trust, Indiana Public Retirement System, Boston Retirement System, and Public School Teachers’ Pension & Retirement Fund of Chicago (collectively) as Lead Plaintiff.
Case Background
Originally filed on January 19, 2023, Plaintiffs, who acquired shares of Silvergate Capital Corporation common stock between November 7, 2019 through March 21, 2023, inclusive (the “Class Period”), and/or acquired shares traceable to the Company’s public securities offerings conducted during 2021, allege that Silvergate defrauded investors in violation of the Securities Exchange Act of 1934, U.S. Securities and Exchange Commission (“SEC”) Rule 10b-5, and other federal statutes.
As a federally regulated banking institution during the class period, Silvergate was subject to a wide variety of federal regulations, such as anti-terrorism and anti-money laundering (AML) regulation by the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FCEN), including the Bank Secrecy Act and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.
A critical component of Silvergate’s cryptocurrency business was its one-of-a kind service called the Silvergate Exchange Network (“SEN”). The SEN was the cryptocurrency world’s closest approximation to the SWIFT banking system, which allowed Silvergate customers to send U.S. dollars and euros between eligible counterparty SEN accounts at any time of day using the Company’s application programming interface.
Throughout the Class Period, Plaintiffs allege that Silvergate repeatedly touted its “strong regulatory compliance program”—including its anti-money laundering policies and Know Your Customer (“KYC”) procedures —as a foundation for its growth.
The truth began to emerge on November 7, 2022, after the market closed, when Silvergate announced the sudden and unexplained demotion of its Chief Risk Officer, Tyler Pearson—the son-in-law of CEO Alan J. Lane. Social media commenters noted Silvergate’s exposure to FTX and Alameda Research LLC and questioned whether Pearson’s demotion indicated a lack of adequate oversight of Silvergate’s regulatory compliance. In response to this news, the price of Silvergate stock declined by $11.54 per share, or 22.6%, from a closing price of $50.96 per share on November 7, 2022, to a closing price of $39.42 per share on November 8, 2022, on unusually high trading volume.
Over the ensuing months, additional disclosures regarding the Company’s lax compliance practices reached investors, further impacting the price of Silvergate stock. Then, on January 5, 2023, the Company disclosed that the collapse of FTX had led to a run on Silvergate Bank, causing its deposits to decline by $8.1 billion, or over 68%, over the three months ending in December 2022. This led to an acute liquidity crunch, which forced Silvergate to sell off illiquid securities for a loss of over $700 million and to borrow $4.3 billion in short-term advances from Federal Home Loan Banks. In response to this news, the price of Silvergate stock declined by $9.38 per share, or 42.7%, from a closing price of $21.95 per share on January 4, 2023 to a closing price of $12.57 per share on January 5, 2023, on unusually high trading volume.