Signature Bank Closed Because of Failing to Provide Consistent and Reliable Data
The International Business Times reported on March 14 that the New York State Department of Financial Services (NYDFS) did not close Signature Bank due to a prejudice against crypto, but rather because it was failing to give consistent and dependable data. This is contrary to what Barney Frank, an executive at Signature Bank, had alleged – that NYDFS was shutting it down as a powerful sign of opposition towards crypto.
The NYDFS spokesperson stated that the closure of the bank had nothing to do with cryptocurrency and was instead due to a lack of trust in its leadership. An abundance of withdrawals occurred over the weekend, prompting an inquiry from the regulator. However, they were unable to obtain accurate and consistent information from management.
The report suggested that Barney Frank was sticking to his original statement. He was quoted as saying: “I think that was a factor. I’m puzzled as to why it was closed,” and he asserted that the bank executives were trying to give information to the regulators, but couldn’t do so before the closure.
New York Banking Law Section 606 gives the NYDFS the power to take over a bank due to various causes, such as refusal of an inspector from the department to examine its records and activities, or when it is in an unsafe or hazardous state for conducting business.
On March 12, Signature Bank was forced to close its doors, part of a series of bank closures that began the week prior, including Silvergate Capital and Silicon Valley Bank. Several crypto-related companies had deposits at Signature Bank, such as Coinbase, Celsius and Paxos. Gemini had worked with the bank before it closed but stated on March 13 that no funds were held in the account when it closed.