Prospective Purchasers of Signature Bank Must Commit to Abandon All Crypto Business: Report

    The Federal Deposit Insurance Corporation (FDIC) has reportedly asked banks interested in acquiring the shuttered New York institution to submit bids by Friday.

    Signature Bank is on the market after being shuttered by state regulators on Sunday, but any potential buyer reportedly has to agree to a major caveat: no crypto.

    Reuters first reported the development on Wednesday evening, citing sources familiar with the matter.

    The New York-based bank’s weekend closure came two days after the collapse of another bank, the California-based Silicon Valley Bank (SVB), and less than a week after the closure of another California-based bank, Silvergate Bank. All three of the now-defunct banks were known as being crypto-friendly financial institutions.

    Signature Bank, whose crypto clients accounted for a quarter of its deposits, was reportedly under investigation by the Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) for potentially lax monitoring that may have enabled money laundering.

    A class action lawsuit was filed against Signature Bank in February, alleging that the bank knew about – and facilitated – the “now infamous FTX fraud.” Specifically, the suit accuses Signature Bank of having knowledge of and permitting “the commingling of FTX customer funds within its proprietary, blockchain-based payments network, Signet.”

    Many in the crypto industry – including former acting Comptroller of the Currency and one-time Binance.US CEO Brian Brooks – have speculated that the closure of the three crypto-friendly banks is indicative of a coordinated effort by regulators to choke the crypto industry off from the banking system.

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

    “I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Frank told CNBC.

    However, the New York Department of Financial Services (NYDFS) has denied that crypto had anything to do with its decision to shutter Signature Bank, instead saying that was due to a “crisis of confidence” in the bank’s leadership.

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