Class-action lawsuit alleges Signature bank ‘permitted’ FTX comingling customer funds

Crypto-friendly Signature Bank has been embroiled in a class action lawsuit over its role in running the defunct cryptocurrency exchange FTX, according to court filings on Feb. 6.

The lawsuit alleges that:

“[Signature Bank] We were aware of and allowed the mingling of FTX customer funds within Signet, our proprietary blockchain-based payment network. ”

Signing banks also defendant Facilitate and abet FTX fraud and violate fiduciary duty; The lawsuit added that the bank obtained ill-gotten profits from deposits for FTX.

Algorithmic trading firm Statistica Capital has filed a lawsuit.

Statistica said it repeatedly advised the bank that the funds were meant for FTX, but the bank allowed them to be transferred to accounts managed by Alameda.

The company added that the underwriting bank significantly facilitated the FTX scam by publicly promoting the exchange. He continued that the bank did not close FTX’s account, even though it knew it was being used in violation of the bankrupt company’s “terms of use and fiduciary duty to its customers.”

Statistica argued that the bank knew about the FTX scam because it was performing enhanced due diligence obligations, including during the onboarding process and ongoing monitoring of accounts and operations.

After the FTX collapse, Signature Bank said cryptocurrency exchange deposits accounted for less than 0.1% of total bank deposits. The bank later added that it would reduce deposits related to crypto assets by up to $10 billion.

Recently, Binance said the bank does not support cryptocurrency transactions below $100,000.

Class action after class action alleges that signatory banks “authorized” FTX-mingled customer funds first appeared on CryptoSlate.