Signature Bank accused of facilitating FTX fraud

According to the lawsuit, the bank had known about the exchange’s wrongdoing since at least June 2020

07.02.2023 - 14:15

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Signature Bank was accused in a lawsuit by an investment firm of facilitating the FTX collapse by allowing the now-defunct crypto exchange to commingle customer accounts with its blockchain network.

Signature did this even though it had observed suspicious FTX transfers through its Signet blockchain payment network, Statistica Capital Ltd. said in a complaint filed Monday in federal court in Manhattan.

The bank said in December it intends to shed as much as $10 billion in deposits from digital asset clients as it embarks on a widespread pullback from the cryptocurrency industry in the wake of the FTX blowup. Deposits from FTX represented less than a 10th of a percent of the bank’s overall deposits as of Nov. 14, the company said in November.

Signature had “actual knowledge” of the FTX fraud since at least June 2020 and “substantially facilitated” the fraud by publicly promoting the exchange and failing to “close, suspend or otherwise limit” Alameda or FTX accounts that were in violation of terms of service, according to the 87-page complaint.

Signature didn’t immediately respond after regular business hours to a phone message seeking comment.

Statistica, which is based in the British Virgin Islands and was previously known as Statistica Fund Ltd., filed the case as a proposed class-action to recover damages for itself and other entities that suffered losses “as a result of Signature’s malfeasance.”

The case is Statistica Capital Ltd. v. Signature Bank, 23-cv-00993, US District Court, Southern District of New York (Manhattan).

This material is taken from the website bloomberg.com.

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