Silvergate Capital Corp. has agreed to settle a class-action lawsuit initiated by its shareholders for $37.5 million, court documents show.
The global settlement, if approved by a judge, resolves litigation over how the firm will assign director and officer insurance proceeds. It also resolves allegations that Silvergate misled investors on how the November 2022 collapse of cryptocurrency exchange FTX, one of its largest customers, would affect its financial position.
The global settlement “eliminates complex, expensive and uncertain litigation,” SCC said in court documents Tuesday, and allows the company to focus on moving forward with its Chapter 11 proceedings.
“While more remains to be done, the approval and consummation of the Securities Litigation Settlement and Indemnification Settlement remove numerous barriers to confirmation and thus are a significant step towards resuming the process of confirming a chapter 11 plan,” SCC wrote.
The class action suit is part of SCC’s larger bankruptcy court case, which began in 2023 when its subsidiary Silvergate Bank began to voluntarily wind down just months after FTX’s own bankruptcy.
By agreeing to the settlement, SCC and several former Silvergate Bank executives, including former CEO Alan Lane and former finance chief Antonio Martino, have not admitted any liability, fault or violation of law.
They “vigorously deny all allegations and claims asserted against them but are … entering into the Settlements to avoid the risk, burden and expense of continued litigation,” SCC wrote.
Working to resolve the case “has been key to minimizing, to the extent possible, continued litigation risk and exposure to the Indemnified Individuals, thereby increasing the value available to other estate constituents,” SCC wrote.
An attorney for SCC did not respond to a request for comment.
