After being shut down by state officials on Sunday, Signature Bank is now up for sale, but any prospective buyer is apparently need to accept a significant stipulation: no cryptocurrency.
The development was initially reported on by Reuters on Wednesday night, according to people familiar with the situation.
The weekend shutdown of the New York-based bank came less than a week after the closure of another California-based bank, Silvergate Bank, and two days after the failure of another bank, the Silicon Valley Bank (SVB), also situated in California. All three of the now-defunct banks were recognised as financial institutions that supported cryptocurrencies.
According to reports, the Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) were looking into Signature Bank because of possible weak monitoring that may have permitted money laundering. Crypto clients made up a quarter of the bank’s deposits.
In February, a class action lawsuit was brought against Signature Bank on the grounds that the bank had knowledge of the “now infamous FTX fraud” and had helped to assist it. The lawsuit specifically charges Signature Bank with knowing about and allowing “the commingling of FTX customer monies within its proprietary, blockchain-based payments network, Signet.”
The Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) were apparently looking into Signature Bank for possible weak monitoring that may have led to fraud. Crypto clients made up a fourth of the bank’s deposits.
In February, a class action lawsuit was brought against Signature Bank on the grounds that the bank had knowledge of the “now infamous FTX fraud” and had helped to assist it. The lawsuit specifically charges Signature Bank with knowing about and allowing “the commingling of FTX customer monies within its proprietary, blockchain-based payments network, Signet.”
Many in the cryptocurrency sector, including Brian Brooks, a former CEO of Binance.US and acting Comptroller of the Currency, have hypothesised that the closure of the three crypto-friendly banks is a sign of a coordinated effort by regulators to cut off the crypto industry from the banking system.
Former Democratic congressman and Dodd-Frank Act co-author Barney Frank, a board member of Signature Bank, believed the takeover was motivated by an anti-crypto sentiment while claiming that Signature Bank was solvent and that authorities nonetheless intervened to send a message.
According to Frank, “I believe that regulators wanted to deliver a very strong anti-crypto message,” which contributed to what transpired.
A “crisis of confidence” in the bank’s management, as opposed to cryptocurrency, was cited by the New York Department of Financial Services (NYDFS) as the reason for closing Signature Bank.
According to Reuters, bids to buy Signature Bank must be submitted by Friday, March 17.
A request for comment from CoinDesk was not immediately responded to by the FDIC.
