A class-action suit was filed against Silvergate Capital, operator of the Silvergate Exchange Network and parent company of Silvergate Bank, in United States District Court of Southern California on Jan. 10. The suit was filed on the behalf of all buyers of Silvergate securities in between November 9, 2021, and January 5, 2023, declaring offenses of the Securities Exchange Act of 1934.

Silvergate CEO Alan Lane and primary monetary officer Antonio Martino were also listed as offender in the match. The plaintiff declared in the match that Silvergate’s platform failed to detect incidents of cash laundering “in amounts exceeding $425 million,” for which the company was likely to face regulatory consequences. The legal papers allege:

“Defendant’s positive statements about the Company’s service, operations, and prospects were materially deceptive and/or did not have a sensible basis. […] As an outcome of these materially false and/or deceptive statements, and/or failures to disclose, Silvergate’s securities traded at synthetically inflated rates during the Class Period.”

Furthermore, “Defendants knew that the general public documents and statements released or disseminated in the name of the Company were materially false and/or misleading.”

The claim that the company was involved in the transfer of $425 million to “South American cash launderers” is based upon a Nov. 15 tweet by Marcus Aurelius Research. That tweet and the Bear Cave newsletter concern of Nov. 17 that mentioned the same concern presumably added to a considerable fall in the Silvergate share cost. After a Silvergate news release revealed that digital possession deposits at the bank had reduced 68% in the last quarter of 2022, from $11.9 billion to $3.8 billion, the share price declined even more.