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

Crypto-friendly Signature Bank has been drawn into a class-action lawsuit over its role in the operations of the defunct crypto exchange FTX, according to a Feb. 6 court filing.

The lawsuit alleged that:

“[Signature Bank] knew of and permitted the commingling of FTX customer funds within its proprietary, blockchain-based payments network, Signet.”

Signature Bank was further accused of aiding and abetting the FTX fraud and breaching fiduciary duties. The lawsuit added that the bank acquired ill-gotten gains from deposits intended for FTX.

An algorithmic trading firm Statistica Capital filed the lawsuit.

Statistica said it advised the bank multiple times that its funds were meant for FTX, but the bank allowed them to be transferred into Alameda-controlled accounts.

The firm added that Signature Bank substantially facilitated the FTX fraud by publicly promoting the exchange. It continued that the bank failed to close FTX’s accounts despite knowing that they were being used in violation of the bankrupt firm’s “terms of services and fiduciary duties to customers.”

Statistica alleged that the bank knew of the FTX fraud because it had carried out its enhanced due diligence obligations, including during the onboarding process and ongoing monitoring of its account and operations.

Following FTX’s collapse, Signature Bank said the crypto exchange’s deposits were less than 0.1% of its overall bank deposits. The bank later added that it would shrink its deposits tied to crypto assets by as much as $10 billion.

More recently, Binance said the bank no longer supported crypto transactions worth less than $100,000.

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