Several cryptocurrency firms have come forward to report their exposure to the now-shuttered Signature Bank, which was shut down by New York regulators on March 12 along with the United States Federal Deposit Insurance Corporation (FDIC) to “protect the US economy” they claimed the bank posed a “systemic risk”. Signature Bank was a key partner for many crypto companies, and its closure has raised concerns about the safety of crypto company funds.
Cryptocurrency exchange Coinbase tweeted on March 12 that it had around $240 million in corporate funds in Signature Bank that it expected to fully recover. Stablecoin issuer and crypto company Paxos also showed up, tweeting that he had $250 million at the bank, but added that he had private insurance that covers the amount not covered by the FDIC’s standard insurance of $250,000 per depositor.
The Celsius Official Committee of Unsecured Creditors, a body that represents the interests of account holders at bankrupt crypto lender Celsius, added Signature Bank.”kept some of his funds” but did not disclose the amount. He added that “all depositors will be upright.”
As of the close of business on Friday, March 10, Coinbase had a balance of approximately $240 million in corporate cash in Signature. As stated by the FDIC, we expect to fully recover these funds. https://t.co/XY5L7m4RMs
—Coinbase (@coinbase) March 12, 2023
Crypto Firms Without Signature Bank Exposure File
As Signature Bank was servicing so many companies in the crypto industry, those companies without exposure likewise stepped forward to assuage fears about their related exposures. Robby Fergusonco-founder of the Web3 Immutable X game development platform and mitch liuco-founder of the media-focused Theta Network blockchain, separately tweeted that their respective companies had no exposure to Signature.
Crypto exchange Crypto.com also reported that it had no funds in the bank as of March 12. cheep by its CEO Kris Marszalek. Stablecoin firm Tether CTO Paolo Ardoino similarly tweeted Tether’s non-exposure to Signature Bank.
Regulators take action to protect depositors
Signature Bank’s forced closure announcement was in line with other banking-related announcements by US regulators. The Federal Reserve said the FDIC was approved to take action to protect depositors at Silicon Valley Bank, a bank focused on tech start-ups that experienced liquidity problems due to a bank run that spread contagion to the cryptocurrency sector. The Fed also announced a $25 billion program to ensure ample liquidity for banks to meet the needs of their customers in times of turbulence.
As regulators take steps to protect depositors and ensure liquidity in times of turbulence, the question arises: how can we ensure the security and stability of the crypto industry in an ever-changing financial landscape? Is it time for a new approach to secure and safeguard these funds?
This post Coinbase, Paxos and Celsius Report Funds Linked to Now Closed Signature Bank
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