Representatives of Signature Bank accuse New York regulators of shutting down the crypto-friendly bank without any legal basis. According to them, the bank had no “insolvency”; the authorities took advantage of the situation and “demonstrated force.”
Barney Frank, a former House of Representatives member and Signature Bank board member, accused the New York State Financial Services Authority (NYDFS) of acting illegally against the bank, treating the regulator’s actions as a “show of force.” “Regulators wanted to send a very strong anti-crypto message,” he said in an interview for CNBC.
The basis for Signature Bank’s closure was the withdrawal of more than $10 billion in deposits from the bank’s accounts. Frank claims customers were frightened by Silicon Valley Bank’s sudden collapse, which resulted in them withdrawing funds. “We had no indication of problems until we got a pure contagion from SVB. We couldn’t do anything because everything happened late Friday night and we were already shut down on Sunday,” Barney Frank sums up.
According to Frank, the authorities had “no real objective reason” to close the bank because “there was no insolvency,” and Signature Bank remains fully solvent. Ryan Selkis, founder and CEO of Messari, also corroborates his words, claiming that NYDFS unfairly shut down the bank.
As a reminder, the New York Department of Financial Services closed Signature Bank “to protect depositors.” It became the third crypto-friendly bank to be shut down by the U.S. government after Silvergate and SVB.
User data confirms Signature Bank’s solvency. For example, one of the bank’s major customers, the mining firm Marathon Digital Holdings, confirmed that their funds are still available. The company has a deposit of $142 million at the bank. Marathon representatives said that the company has access to the funds through Signature Bridge Bank: a special bridge bank created by the FDIC to manage the accounts of the closed bank’s clients. The company’s representatives also quickly clarified that Marathon has no direct business relationship with Silicon Valley Bank but has over 11,000 BTC (~$267 million) as a safety cushion outside the traditional banking system.
As a reminder, the community reacted negatively to the closure of crypto-friendly banks, accusing the government of a “crackdown against the crypto industry.”
