Word of God Fellowship Sues Bank and its CEO for Fraud
The Daystar Television owners claim Silvergate may have seen the FTX collapse coming when it accepted its $25 million deposit
Word of God Fellowship Inc, which owns Daystar Television Network, is 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.
Attorneys for Word of God claim in a newly filed non-conforming lawsuit that Silvergate and its CEO, Alan Lane, had “unparalleled knowledge of the rampant fraud and corporate malfeasance.”
Rather than reporting on FTX and Bankman-Fried’s alleged scheme, the bank continued to funnel money to FTX, including the $25 million deposited by the church only two months before FTX’s public collapse, it says.
Now Word of God is demanding Silvergate return its deposit in full.
The lawsuit details FTX’s quick and astronomical rise from a small cryptocurrency exchange to a platform valued at $32 billion in a matter of years.
As the value of FTX increased, Silvergate’s relationship with Bankman-Fried’s company and his associated hedge fund, Alameda Research, flourished.
The suit says that, in total, at least $8 billion in FTX customer funds were transferred into Alameda’s accounts at Silvergate Bank from May 2019 to mid-2022. The amount exceeded FTX’s total lifetime revenue.
Then, the lawsuit continues, as FTX began to falter, Silvergate and its CEO, Lane, did nothing.
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There was no evidence that Silvergate or Lane sought to investigate or report FTX and Alameda’s suspicious activity despite the “glaring red flags,” the lawsuit reads. “Rather, Silvergate continued accepting deposits into both entities’ accounts and processing transfers between them. In doing so, Silvergate enormously profited from the ever-increasing customer deposits in FTX and Alameda accounts.”
Then, in September 2022, Word of God leaders signed on as FTX customers and agreed to deposit $25 million into its new account.
According to the lawsuit, FTX declared bankruptcy two months later, and the church’s funds vanished.
“On November 15, 2022, counsel for [Word of God] sent a written demand to Silvergate to return [its] deposit. Silvergate refused on the same day.” the report says. “As a result, [Word of God] is informed and believes that its $25,000,000 deposit was part of the $8 billion misappropriated by FTX to Alameda using Silvergate bank accounts.”
Police arrested Bankman-Fried last December, and two of his top associates pleaded guilty to criminal charges.
The complaint says Word of God is seeking the $25 million deposit, plus restitution. The case will move forward in the San Diego Superior Court.
Although Word of God Fellowship Inc. is registered in Georgia, the Texas location is its main branch out of four.
