Crypto Derivatives Platform LedgerX Ditches Silvergate for Signature Bank
According to a Bloomberg report, the trading platform that offers derivatives products based on Ethereum and Bitcoin, LedgerX, will no longer use Silvergate bank to receive wire transfers. Instead, the company will use Signature Bank going forward.
It is not yet clear why LedgerX made this move. Our efforts to reach for a Comment have been in vain.
LedgerX was bought by FTX founder Sam Bankman-fried in 2021 and was among the few firms owned by the fallen crypto guru which remained solvent following FTX’s bankruptcy proceedings in November.
In January, the court gave the green light to the new management of FTX to sell four of the company’s independent subsidiaries, with LedgerX included. Some of the big names interested in buying the trading platform include crypto exchanges Gemini, Bitpanda, and Blockchain.com, among others.
Silvergate and Signature Bank Controversies
Both Signature Bank and Silvergate are popular for connecting crypto companies with traditional banking services. However, they have been involved in various disputes in recent weeks.
Bankman-Fried’s companies had accounts at both Signature Bank and Silvergate. Now the two financial institutions are being scrutinized by the US regulators.
Last December, Silvergate was hit with a class action lawsuit, alleging it facilitated FTX’s illegal activities. As per the lawsuit, Silvegate is accused of participating in making improper transfers, lending out of customer funds, and commingling funds.
On the other hand, Signature Bank was slapped with a separate lawsuit in early February, with algorithmic trading company Statistica Capital alleging that the financial institution had knowledge of and largely facilitated the FTX fraud.
Silvergate Dealings With FTX Attract US Lawmakers
Silvergate’s association with FTX also grabbed the attention of US lawmakers, including crypto-hating Senator Elizabeth Warren. The lawmakers sent a letter to Silvergate CEO Alan Lane in January, accusing the firm of introducing crypto risks to the traditional banking system. They also demanded more information regarding the relationship between Silvergate and FTX.
Silvergate released its quarter four financial report last month, which revealed that the firm had posted a $1.1 billion net loss and a drop in client deposits of approximately $14.5 billion.
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