Last year, MinistryWatch reported that Word of God Fellowship Inc., which owns Daystar Television Network, was suing Silvergate, a now-liquidated cryptocurrency bank, for using $25 million in ministry deposits to participate in a massive cryptocurrency scheme with Sam Bankman-Fried’s now-defunct FTX Trading.
Photo by to Towfiqu barbhuiya / Pexels / Creative Commons
In March 2024, a federal court ruled in favor of FTX users against Silvergate, denying the bank’s request to dismiss a claim stating the bank owed FTX clients a duty of care.
The ruling means that Silvergate must face a class-action lawsuit from FTX users who say the now-defunct bank assisted fraud at FTX and its affiliated trading firm, Alameda Research.
The judge faulted Silvergate, saying it was among the few banks willing to service the crypto industry, including FTX and its co-founder, Bankman-Fried.
Silvergate was once the longest-standing and most important bank serving the crypto industry.
Access to MinistryWatch content is free. However, we hope you will support our work with your prayers and financial gifts. To make a donation, click here.
The bank collapsed in March 2023, a few months after FTX filed for bankruptcy in November. The sudden bankruptcy left millions of users frozen out of their accounts and unable to make withdrawals.
Silvergate’s annual income was about $7.6 million before the FTX dealings, rising to $75.5 million after processing customer funds for the exchange.
In a lawsuit filed last year, attorneys for Word of God claimed that Silvergate and its CEO, Alan Lane, had “unparalleled knowledge of the rampant fraud and corporate malfeasance.”
As FTX began to falter, the suit said that Silvergate and its CEO did nothing.
The complaint said that rather than reporting on FTX and Bankman-Fried’s multibillion-dollar scheme, Silvergate continued to funnel money to FTX, including the $25 million deposited by the church only two months before FTX’s public collapse.
Word of God demanded that Silvergate return its deposit in full.
Badly bruised after the FTX filing led to an exodus of major corporate customers, including Circle, Gemini, Paxos, and Coinbase, Silvergate announced in March 2023 that it was closing its doors.
The bank cited “recent industry and regulatory developments” as the source of its issues.
These regulatory developments encompassed a wide range of topics, including a Justice Department inquiry and increasing efforts by the Federal Reserve Board and other government regulators overseeing the banking sector to steer those institutions clear of cryptocurrency.
The closing strategy included a winding down and repayment of the monies lost from its depositors, and in June 2023, the federal court closed Word of God’s suit to combine it with related cases.
The bank announced in November 2023 that it had officially repaid all its remaining deposit liabilities, other than de minimis amounts amounting to less than $10,000.
The ruling concludes a long-running lawsuit initiated by the plaintiffs in early 2023. The plaintiffs now have the green light to pursue litigation.
Due to the overwhelming number of related cases filed against Silvergate, Word of God’s suit—along with over 50 other plaintiffs—has been absorbed into the class action-suit Bhatia v. Silvergate Bank.
On May 23, 2024, a federal court released a scheduling order requiring all parties to complete their pre-trial proceedings.
In the same month of the ruling, authorities sentenced Bankman-Fried to 25 years in prison for stealing over $10 billion from investors.
TO OUR READERS: Do you have a story idea, or do you want to give us feedback about this or any other story? Please email us: info@ministrywatch.com