Signature Bank’s financial assets were sold to Flagstar Bank. However, crypto-related deposits remained out of the deal.
The Federal Deposit Insurance Corporation (FDIC) announced an agreement with New York Community Bancorp, Inc. to sell all of Signature Bank’s deposits and loans not related to crypto to their subsidiary Flagstar Bank.
Thus, Flagstar Bank owns $38.4 billion of Signature’s deposits and $12.9 billion of loans under the purchase and sale agreement. All 40 branches of Signature Bank began operating as branches of Flagstar Bank on March 20, and all purchased deposits received FDIC insurance, according to a special funding program for banks created by the FED.
It’s worth noting that Signature Bank’s deposits that belonged to a digital asset business weren’t included in the deal. Deposits worth about $4 billion will be returned to customers who used a digital bank account at Signature. Coinbase, Celsius, and Paxos are among the crypto companies holding these deposits at the bank that went bankrupt.
Earlier, in an interview for Reuters, two anonymous sources said that anyone interested in buying Signature would have to withdraw support from crypto companies at the bank. This information will be checked by the regulator, as a potential buyer is required to provide the regulator with its financials before submitting a purchase request. However, an FDIC spokesperson denied this information, saying the agency wouldn’t require the buyer to drop its support for cryptocurrency companies. He also noted that the agency didn’t seek to ban any specific activities of the banks. Yet, as a result, Signature’s crypto-assets were excluded from the deal.
The cryptocurrency community, previously accusing the U.S. authorities of the impropriety of closing Signature Bank, considering the regulator’s actions as a “crackdown against the crypto industry”, confirmed its opinion. Thus, Nic Carter, Co-Founder of Castle Island and Coin Metrics, argues that the FDIC simply forced those wishing to buy Signature Bank to give up cryptocurrency deposits.
Crypto companies began actively cutting ties with Silvergate Bank after rumors of its bankruptcy surfaced, transferring some funds to Signature Bank accounts, which was also eventually declared insolvent.
