NYDFS: Signature Bank Closed Due To Crisis Of Trust In Management

Key Points:

• New York regulator NYDFS recently argued that Signature Bank closed due to a loss of trust in management, not cryptocurrency.
• The bank’s failure to provide consistent and reliable data led depositors to withdraw over $10 billion last Friday.

The New York Department of Financial Services (NYDFS) asserts that the US government’s closure of Signature Bank has nothing to do with the bank’s relationship with the cryptocurrency industry and is not due to a takeover to fight the crypto industry but a loss of trust in the crypto industry their leadership.

“The decisions made over the weekend were not crypto related,(…). Signature was a traditional commercial bank with a wide range of activities and customers, including small businesses like food vendors at Hunt’s Point, residential mortgage banking, and commercial real estate, to name a few. DFS has facilitated well-regulated crypto activities for several years and is a national model for regulating the space.”

The spokesperson said.

As mentioned earlier, the NYDFS ordered the shutdown of the signature bank that provides services to crypto companies over the weekend and handed it over to the Federal Deposit Insurance Corporation (FDIC) manage and refund all deposits to customers.

This action follows the decision to close and confiscate assets of the 16th largest bank in the US, Silicon Valley Bank, and before that, Silvergate Bank announced voluntary liquidation of assets.

In less than a week, the financial market has witnessed three consecutive bank failures causing many concerns. The common feature of the heavily regulated banks is that they are open to companies that provide cryptocurrency services. Therefore, the question of cryptocurrency purging by legal authorities has arisen.

Previously, Mr. Barney Frank – a member of Signature Bank’s management board, confirmed that his bank could still handle it at the time of intervention. Despite being massively withdrawn by depositors and businesses with up to 10 billion USD, Frank insisted he controlled the situation.

But trails are the opposite of that. The NYDFS said Frank admitted that depositors withdrew more than $10 billion on Friday.

“The bank failed to provide reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership (…). The decision to take possession of the bank and hand it over to the FDIC was only made when it was clear the bank could not do business safely and soundly on Monday. The Department continues to work with federal regulators and other officials to review and fully investigate the events that have unfolded and hold people accountable.”

NYDFS said.

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