Silvergate Capital Corporation (SI) Made False and Misleading Statements Regarding its Business Prospects
A shareholder filed a class action on behalf of all investors who purchased or otherwise acquired Silvergate Capital Corporation (NYSE: SI) securities between November 9, 2021 and November 17, 2022, for violations of the Securities Exchange Act of 1934. Silvergate is a digital currency company. Its platform, the Silvergate Exchange Network (“SEN”), provides payments, lending, and funding solutions for an expanding class of digital currency companies and investors. Silvergate is also the parent company of Silvergate Bank, which provides financial services that include commercial banking, commercial and residential real estate lending, mortgage warehouse lending, and commercial business lending.
According to the complaint, on November 15, 2022, Marcus Aurelius Research tweeted that “Recently subpoenaed Silvergate bank records reveal $425 million in transfers from $SI crypto bank accounts to South American money launderers. Affadavit from investigation into crypto crime ring linked to smugglers/drug traffickers.” On this news, the Company’s Class A common stock price fell $6.13, or 17%, to close at $29.36 per share on November 15, 2022.
Then, on November 17, 2022, The Bear Cave newsletter released an article about several companies with potential exposure to recently collapsed cryptocurrency exchange FTX, including Silvergate. The article highlighted the connection linking Silvergate to a money laundering operation that transferred $425 million off cryptocurrency trading platforms. On this news, the Company’s Class A common stock price fell $3.00, or 10.7%, to close at $24.90 per share on November 18, 2022.
Accordingly, during the class period, defendants failed to disclose to investors: (1) that the Company’s platform lacked sufficient controls and procedures to detect instances of money laundering; (2) that Silvergate’s customers had engaged in money laundering in amounts exceeding $425 million; and (3) that, as a result of the foregoing, the Company was reasonably likely to receive regulatory scrutiny and face damages, including penalties and reputational harm.
What Now: Shareholders who acquired shares of Silvergate Capital Corporation between November 9, 2021 and November 17, 2022, must file their papers to be appointed lead plaintiff for the class by February 6, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the Silvergate case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.