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Church sues Silvergate Bank for losing $25 million deposit in FTX crypto-scheme

In new lawsuit, Texas-based Word of God Church accuses the San Diego-based crypto-bank of fraud.

SAN DIEGO — A Texas-based church is suing the now-liquidated San Diego-based cryptocurrency bank, Silvergate, for using $25 million in church deposits to participate in a massive crypto-currency scheme with Sam Bankman-Fried's now defunct, FTX Trading.

In a newly filed non-conformed lawsuit, attorneys for the Word of God Church say Silvergate and its CEO, Alan Lane, had "unparalleled knowledge of the rampant fraud and corporate malfeasance." Still, instead of reporting on FTX and Bankman-Fried's alleged scheme, the bank continued to funnel money to FTX, including the $25 million the church deposited only two months before FTX's public collapse.

The Word of God Church now wants that money back.

In the newly-filed lawsuit, filed in San Diego County, attorneys for the church chronicle FTX's meteoric rise from a small cryptocurrency exchange to a platform valued at 32 billion dollars in a few years.

As FTX's value skyrocketed, the lawsuit states that Silvergate's relationship with Bankman-Fried's company and his associated hedge fund, Alameda Research, blossomed. 

"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, exceeding FTX’s total lifetime revenue," reads the lawsuit.

And according to the lawsuit, as FTX showed signs of faltering, Silvergate and its CEO, Lane, failed to act.

"Despite the glaring red flags, there is no evidence that Silvergate or Lane took any action to report or investigate FTX and Alameda’s suspicious activity," says the lawsuit. "Rather, Silvergate continued accepting deposits into both entities’ accounts and processing transfers between them. In doing so, Silvergate raked in enormous profits from the ever-increasing customer deposits in FTX and Alameda accounts." 

Then, in September of last year, leaders from the Word of God Church joined FTX as a customer and agreed to deposit $25 million into its new account. 

Just two months later, says the lawsuit, FTX filed for bankruptcy, and the church's money disappeared.

"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. [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." 

By December, Bankman-Fried was arrested, and two of his top associates pleaded guilty to criminal charges.

Now, as the fallout continues and Silvergate has announced it was shutting down, the Texas-based church seeks to recoup its money and collect damages from the alleged wrongdoing. 

The lawsuit will now be assigned to a judge and move forward in San Diego Superior Court.

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