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Signature Bank’s Prospective Buyers Must Agree to Give Up All Crypto Business: Report

Signature Bank is for sale after being closed down by state officials on Sunday, but any potential buyer will apparently have to agree to a big caveat: no cryptocurrency. Reuters broke the news on Wednesday evening, citing persons familiar with the situation.

The weekend shutdown of the New York-based bank came two days after the failure of another California-based bank, Silicon Valley Bank (SVB), and less than a week after the failure of another California-based bank, Silvergate Bank. The three now-defunct banks were all renowned as crypto-friendly financial organizations.

Signature Bank, whose crypto clients accounted for a quarter of its deposits, was apparently under investigation by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) for potentially weak monitoring that allowed money laundering.

In February, a class action complaint was launched against Signature Bank, alleging that the bank was aware of — and facilitated – the “now infamous FTX fraud.” Signature Bank is accused of knowing about and allowing the “commingling of FTX customer monies within its proprietary, blockchain-based payments network, Signet.”

Many in the crypto business, including former acting Comptroller of the Currency and former Binance.US CEO Brian Brooks, have theorized that the closure of the three crypto-friendly banks is the result of a coordinated effort by regulators to isolate the crypto industry from the banking system.

Signature Bank board member and former Democratic congressman Barney Frank, who co-authored the Dodd-Frank Act, also indicated the takeover was motivated by anti-crypto sentiment, telling CNBC that Signature Bank was solvent – and that regulators intervened regardless to send a message.

“I believe officials intended to convey a very strong anti-crypto message,” Frank told CNBC. However, the New York Department of Financial Services (NYDFS) has disputed that cryptocurrency played any role in its decision to close Signature Bank, instead citing a “crisis of confidence” in the bank’s leadership. According to Reuters, bids for the acquisition of Signature Bank are due by Friday, March 17.

 

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