American cryptocurrency exchange Coinbase, Binance United States dollar-backed stablecoin (BUSD) issuer Paxos and defunct crypto lender Celsius Network have all revealed their exposure to Signature Bank. Notably, the crypto-friendly bank Signature Bank winded down on March 12th based on the decision of New York regulators in collaboration with the U.S. Federal Deposit Insurance Corporation (FDIC).
Just when it felt like the crypto winter was beginning to dwindle and stability was returning to the industry, another disaster hit the U.S. financial sector.
Signature Bank imploded owing to several failures in its banking system as well as liquidity problems. Coinbase released a tweet that stated that it has up to $240 million in corporate funds tied up in Signature Bank and expects to recover all of it as promised by the FDIC.
As of close of business Friday March 10 Coinbase had an approximately $240m balance in corporate cash at Signature. As stated by the FDIC, we expect to fully recover these funds. https://t.co/XY5L7m4RMs
— Coinbase (@coinbase) March 12, 2023
Earlier today, Paxos confirmed that It holds $250 million in the now-shuttered bank, and at the same time, it has private deposit insurance “well in excess of our cash balance and FDIC per-account limits.”
The government has taken extraordinary measures to protect customers and announced all customer deposits at Signature Bank will be fully guaranteed and expect to be made available to customers on Monday.
— Paxos (@PaxosGlobal) March 12, 2023
Although now bankrupt, the representative of Celsius Network’s account holder dubbed Celsius Official Committee of Unsecured Creditors claimed to have funds in Signature Bank but the value of this asset was not disclosed.
Today the US government announced the closure of Signature Bank where Celsius held some of its funds. All depositors will be made whole, per US Gov. Celsius and the UCC are evaluating the situation and will provide further updates. Announcement here: https://t.co/v5GSvTL7JY
— Celsius Official Committee of Unsecured Creditors (@CelsiusUcc) March 12, 2023
Three Crypto-Friendly Banks Crash Under One Week
Adrianne Harris, the New York Department of Financial Services Superintendent explained,
“Signature Bank is a New York state-chartered commercial bank and is FDIC-insured, with total assets of approximately $110.36 billion and total deposits of approximately $88.59 billion as of December 31, 2022.”
According to the FDIC, Signature Bank posed a “systemic risk”, hence the need to make the decision and protect customers and the U.S. economy.
This unfortunate situation happens while some of the listed entities are still trying to nurse their wounds from the collapse of Silvergate Bank. The recent shutdown of Silicon Valley Bank makes Signature Bank the third bank to crash within one week.
Although, a joint statement by the Federal Reserve, U.S. Treasury, and the FDIC assured that deposits will be made accessible from Monday. “All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer,” the trio announced
