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Signature Bank, a New York-based commercial bank, is now facing a federal lawsuit as a result of the role it played in the collapse of the crypto exchange platform, FTX. Statistica Capital, a trading firm, filed the lawsuit earlier this week, claiming that the bank “had actual knowledge of and substantially facilitated the now-infamous FTX fraud.”

Furthermore, the lawsuit accused the New York-based bank of allowing FTX customer funds to be mixed within Signet, the bank’s blockchain-based payments network. The lawsuit also claimed that the plaintiffs informed Signature on multiple occasions that their funds were intended for FTX. Despite this, Signature Bank allegedly permitted funds to be transferred via Signet and wire into Alameda-controlled accounts.

The Aftermath of the FTX Collapse

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The aforementioned lawsuit is the most recent update on the ongoing crypto contagion, which allegedly began when FTX went bankrupt. The collapse of the aforementioned exchange has had a significant impact not only on digital assets and companies in the crypto industry, but also on traditional banks such as Signature.

Signature Bank has already announced that they are withdrawing from the crypto industry, citing that 23% of their deposits in December were crypto-related, and they hope to reduce that percentage to as low as 15%. In which Signature Bank Chief Operating Officer Eric Howell stated that they are more than just a crypto bank and intended to emphasize that fact.

The chief operating officer also stated that they plan to exit nearly $10 million in cryptocurrency deposits. He went on to say that they can easily cover that with cash and borrowings.

Silvergate Also Under Investigation

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Signature Bank is not the only bank under investigation; reports have revealed that other banks, such as Silvergate Capital, which have also chosen to venture into the crypto industry, are now being investigated by the federal government. The aforementioned bank allegedly hosted accounts for FTX and Alameda Research.

The federal government’s ongoing investigation is reportedly focused on banks and intermediaries that had exposure to the now-bankrupt cryptocurrency companies that have since been accused of fraud. According to reports, Silvergate Capital has not yet been accused of wrongdoing.

In this regard, the aforementioned bank previously positioned itself as one of the leading go-to banks for crypto companies, emerging early on as a key provider of services catering to the industry. Unfortunately, its visible ties to the crypto industry meant that it was among the more traditional lenders hardest hit by the implosion of FTX and Alameda. The effect was a reaction to the bank’s announcement of one billion loss for the fourth quarter of 2022 and the layoff of 40% of its workforce.