Signature Bank Sued for Allegedly ‘Facilitating’ FTX Fraud

Signature Bank is facing a federal lawsuit for its role in the collapse of FTX.

The lawsuit, filed Monday (Feb. 6) by trading firm Statistica Capital, says the New York-based bank allegedly “had actual knowledge of and substantially facilitated the now-infamous FTX fraud.”

The suit further accuses Signature of allowing the commingling of FTX customer funds within Signet, the bank’s blockchain-based payments network.

“Plaintiffs themselves advised Signature on multiple occasions that their funds were intended for FTX; Signature nevertheless allowed their funds to be transferred via Signet and by wire into Alameda controlled accounts,” the suit says, referring to FTX’s associated firm.

PYMNTS has contacted Signature for comment but has yet to receive a reply.

The suit is the latest example of the continuing crypto contagion that began last year with FTX’s collapse. That company’s downfall spilled over into other digital asset firms and has also affected traditional banks like Signature. 

The bank began scaling back its crypto business last year after courting the industry, saying in December that while 23% of its deposits were related to the crypto industry in mid-November, it wanted to bring that number down to under 15%.

“We’re not just a crypto bank and we want that to come across loud and clear,” Signature Bank Chief Operating Officer Eric Howell said during an industry conference at the time. 

He added that Signature was “going to exit about $8 billion to $10 billion worth of deposits in that space, which we can easily cover through cash and borrowings.”

Meanwhile, another bank that had sought out crypto business is reportedly under investigation by the federal government. 

A report last week by Bloomberg News said federal prosecutors were examining Silvergate Capital’s hosting of accounts for FTX and Alameda Research. The investigation apparently focuses on what banks and intermediaries knew about the now-bankrupt cryptocurrency companies that have since been accused of fraud.

The bank, however, has not been accused of wrongdoing, the report says. 

“Silvergate modeled itself as one of the leading go-to banks for crypto companies and emerged early on as a key provider of services catering to the industry,” PYMNTS wrote last week. 

However, its ties to the industry meant it was among the more traditional lenders hit hardest by FTX and Alameda’s implosion, reporting a $1 billion loss for the final quarter of 2022 and cutting 40% of its staff.