FTX’s LedgerX Switches Banking Partner From Silvergate To Signature: Bloomberg

Summary:

• FTX’s crypto derivatives exchange LedgerX instructed customers to make local wire transfers through Signature bank instead of the firm’s usual banking partner, Silvergate bank
• Bloomberg reported that LedgerX users will have to send wire transfers via Signature bank beginning Wednesday.
• LedgerX remains one of the few remaining solvent entities from Sam Bankman-Fried’s crypto empire.

FTX’s crypto derivatives exchange LedgerX directed customers to make local wire transfers through Signature bank instead of the firm’s former banking partner, Silvergate bank. Bloomberg reported that LedgerX domestic users sending wire transfers must now do so via Signature bank. The new wire transfer format will start from Wednesday, Mar. 1, 2023, per reports.

LedgerX customers were informed of the banking change by email. Also, the trading venue seemingly had a past relationship with Signature but the details remain unclear, two people familiar with the matter said. 

In 2021, LedgerX was bought by Sam Bankman-Fried’s FTX.US. The company offers Bitcoin and Ethereum derivatives, giving users exposure to crypto’s two largest tokens by market cap. Also, the trading venue remains one of the few remaining solvent entities from SBF’s crypto empire after the fallen crypto tycoon filed for bankruptcy in November.

During a bankruptcy hearing, FTX under new CEO John Ray III received court approval to sell LedgerX and three other entities under Bankman-Fried’s crypto umbrella. So far, companies like Gemini and Blockchain.com have submitted bids to acquire the crypto exchange. 

Signature And Silvergate Pressured For Ties With FTX

Silvergate and Signature both faced scrutiny over their dealings with troubled crypto exchange FTX. Both banks operated accounts for SBF’s platform including the basket of entities affiliated with his empire. 

The U.S. Department of Justice was investigating Silvergate and its ties with Bankman-Fried’s company in February. As the news broke, Silvergate stock crashed as much as 22%. A bipartisan group of U.S. legislators also grilled the bank over the “reckless handling of customer funds and the failure of the company’s risk management and due diligence measures.”

Silvergate’s Q4 financial report revealed $1 billion in net losses. Crypto customer deposits also dropped by $14 billion as clients pulled out their funds amid attention from federal prosecutors on the bank. 

Class action lawsuits were separately filed against both banks and Silvergate announced plans to wind down services for crypto banking deposits.