- Crypto-friendly bank forced close by New York regulators.
- Coinbase and a few other crypto firms announce exposure to signature bank over the weekend.
- Crypto.com assures users that it is not exposed to the bank
The signature bank had ties with many crypto firms. It was known as a crypto-friendly bank and a key partner for a reasonable number of cryptocurrency firms, a few of which are now coming out to disclose their exposure to the recently shut down bank.
A few of these crypto firms include crypto exchange firm, Coinbase, stablecoin issuer Paxos and crypto lending firm Celsius all with claims of funds tied up with the now closed-up crypto-friendly bank, Signature.
New York regulators shut down the signature bank during the weekend in partnership with the United States Federal Deposit Insurance Corporation to protect the economy of the United States with a claim that Signature bank posed a systemic risk to the economy.
As the news broke out during the weekend, Coinbase tweeted that they were exposed to the bank with around $240 million in corporate funds at the signature bank. With the closure of Signature, the recovery is currently an uncertain one.
Coinbase, however, also tweeted that it had all intent to recover its funds left in the bank; Paxos also immediately came forward to tweet about their $250 million held at signature bank.
While Celsius is bankrupt, the official committee of Unsecured creditors for the crypto lending firm, an association representing the interests of account holders, also came forward to add that Signature bank was holding some of the firm’s funds but declined to disclose the amount.
The signature bank had a reputation as a reliable crypto bank. Hence, while crypto firms that were exposed to it came forward to discuss their exposure, firms that were not exposed also came forward to announce to their users that they were not exposed to clear up any fear the closure of the bank may have stirred up.
A co-founder of a web three game development platform Immutable X, Robbie Ferguson, and a co-founder of a media-focused Theta Network blockchain, Mitch Liu, both came forward during the weekend to dispel any speculations about their exposure to signature banks.
The CEO of the crypto exchange, Crypto.com, also came forward in a tweet to announce that their business had no funds kept at the signature bank.
Conclusion
Signature bank’s forced closure aligned with other bank-related announcements by U.S regulators. The Federal Reserve said the FDIC had received approval to protect depositors in Silicon Valley. At the time, this tech start-up-focused bank was experiencing liquidity issues due to a bank run that, unfortunately, spread contagion to the crypto sector.
The federal reserve also announced the creation of a $25 billion program that would help ensure ample liquidity for banks to cover the needs of their users during these times of chaos.
