LedgerX, a trading platform offering derivatives products based on Bitcoin and Ethereum cryptocurrencies, is no longer using Silvergate Bank to receive domestic wire transfers, according to a Bloomberg report.
Going forward, LedgerX will use Signature Bank instead, the company said in an email to customers.
LedgerX was acquired by FTX.US in 2021 and was one of the few Sam Bankman-Fried-linked projects which remained solvent in the aftermath of FTX’s Chapter 11 bankruptcy proceedings last November.
As a CFTC-regulated trading platform, it also played an important role in the disgraced crypto mogul’s push to gain influence in Washington.
FTX’s new management was cleared to sell four of the firm’s independent subsidiaries, including LedgerX, in January this year. Some of the bidders reportedly include crypto exchanges Blockchain.com, Gemini, and Bitpanda, as well as event-contracts trading platform Kalshi.
LedgerX and Signature Bank did not immediately respond to Decrypt's request for comment.
Silvergate, Signature mired in controversy
Both Silvergate and Signature Bank have made their name connecting crypto firms with traditional banking services. Of late, though, they have both faced a fair share of controversy.
Bankman-Fried’s FTX and its affiliated entities had accounts at both Silvergate and Signature Bank, with the two companies now facing increased scrutiny from regulators.
Silvergate was slapped with a class action lawsuit in December, alleging it directly aided FTX’s fraudulent activities, being engaged in “first-hand participation in the commingling of funds, improper transfers, and lending out of customer money.”
Silvergate's dealings with FTX and Alameda also drew attention from a bipartisan group of U.S. senators, including the long-time crypto critic Elizabeth Warren. In a letter to CEO Alan Lane last month, the lawmakers alleged that the California-based company "further introduced crypto market risk into the traditional banking system," demanding more information about the relationship between FTX, Alameda Research, and Silvergate.
In its Q4 2022 financial results, Silvergate reported a $1 billion net loss as well as a decline in customer deposits of roughly $14 billion, citing the "planned reduction in digital asset banking deposits" alongside industry-wide chaos.
Signature Bank, in turn, was hit with a separate class action lawsuit last month, with investment and algorithmic trading firm Statistica Capital alleging that it “had actual knowledge of and substantially facilitated the now-infamous FTX fraud.”
While Signature Bank refused to “comment on specific clients,” the firm told Bloomberg it is “still in the business of holding digital asset deposits.”