SAN DIEGO–(BUSINESS WIRE)–$SI #SI—The Class: Robbins LLP informs investors that another shareholder filed a class action on behalf of investors who purchased or otherwise acquired Silvergate Capital Corporation (NYSE: SI) securities, for violations of the Securities Exchange Act of 1934. The class period for the new case concerns shares purchased between November 9, 2021 and January 5, 2023. 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.
What Now: Similarly situated shareholders may be eligible to participate in the class action against Silvergate. Shareholders who want to act as lead plaintiff for the class must file their papers 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 case to be eligible for a recovery. For more information, click here.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
What is this Case About: Silvergate Capital Corporation (SI) Made False and Misleading Statements Regarding its Business Prospects
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.
On January 5, 2023, Silvergate issued a press release disclosing that total deposits from digital asset customers had declined to $3.8 billion as of December 31, 2022, compared to $11.9 billion as of September 30, 2022, a decline of roughly 68%. On this news, the Company’s Class A common stock fell more than $9.00 per share, from a closing price of $21.95 on January 4, 2023, to $12.57 on January 5, 2023, a drop of 42.73%.
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.
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