Silvergate Bank

Silvergate has reportedly laid off 200 members of its staff, which is around 40% of its total number of employees.

The FTX debacle has triggered a bank run on Silvergate, causing the company to sell off its assets at a loss and cut staff by 40% to cover $8.1 billion worth of customer withdrawals.

According to a report published by the Wall Street Journal, the bank liquidated debt that it was holding on its balance sheet to keep up with withdrawals, losing $718 million in the process. The loss reportedly surpasses the firm’s profits since 2013. In addition, crypto-related deposits in the firm have dropped by 68% in the fourth quarter of last year.

Because of this, Silvergate dismissed around 200 employees, which was 40% of its total personnel. Apart from this, the bank also canceled a plan to launch its own digital currency project, writing off almost $200 million that it paid Facebook to buy the technology it built for the Diem project.

Despite this, the bank remains positive in its commitment to crypto and claims to have enough funds to handle a transformation phase. The bank highlighted that it's "taking decisive action" to navigate the current market situation.

The bank has been under scrutiny from United States lawmakers because of its ties to FTX and Alameda Research. On Dec. 6, three US senators wrote a letter to Silvergate to probe the bank's involvement in customer losses as the FTX exchange collapsed. The company's role in transferring FTX customer funds to Alameda seems to be a failure on its end in monitoring and reporting suspicious activity according to the letter.

Related: Companies and investors may need to return billions in funds paid by FTX

On Dec. 16, a class-action lawsuit was filed against Silvergate, in an attempt to hold it accountable for its alleged roles in the loss of FTX customer funds. The lawsuit alleged that the bank is liable for its involvement in "furthering FTX's investment fraud."

The suit is looking to hold Silvergate accountable for its alleged roles in transferring FTX user deposits to Alameda bank accounts.

A class-action lawsuit against Silvergate Bank, Silvergate Capital Corporation and Silvergate CEO Alan Lane was filed at the California Southern District Court concerning accounts held by embattled crypto companies FTX and Alameda Research.

The suit aims to hold Silvergate accountable for its alleged roles in placing FTX user deposits into the bank accounts of Alameda, which caused panic within the crypto market, eventually leading to both firms declaring bankruptcy.

The lawsuit was filed by the plaintiff Joewy Gonzalez on behalf of himself and others in the same situation. According to the suit, the plaintiff invested his savings in crypto through the FTX exchange as the platform promised investors that they were able to "store assets securely as they gained in value, cash them out or trade them for other assets."

The suit alleges that Silvergate aided and abetted FTX’s fraudulent activities and the exchanges’ breaches of fiduciary duty through improper transfers, lending user funds and comingling funds. According to the lawsuit, Silvergate is liable for its role in “furthering FTX’s investment fraud” and has an obligation in returning what they owe to the plaintiff and other investors.

The plaintiff is represented by Girard Sharp and Hartley LLP. On the other hand, the defendants' counsel has not yet appeared at the time of writing. 

Related: FTX ex-staffer: Extravagant expenditures and cult-like worshipping of SBF

On Dec. 6, three United States senators wrote a letter to Silvergate demanding answers on the firm’s role in the loss of billions of dollars during the FTX collapse. Senators Elizabeth Warren, John Kennedy and Roger Marshall asked Lane to provide details on the firm's relationship with FTX.

Meanwhile, FTX lawyers have recently requested permission to sell off FTX Europe, FTX Japan, its derivatives exchange LedgerX and Embed, which is a stock-clearing platform. According to the lawyers, since the businesses are under regulatory pressure, the value of the assets is at risk and this merits an "expeditious sale process."