The New York Department of Financial Services (NYDFS) closed Signature Bank for “failing to provide consistent and reliable data” and not because of bias against crypto, according to a March 14 report by the International Business Times. Signature Bank Board Member Barney Frank had previously accused the regulatory agency of shutting him down simply to “send a very strong anti-crypto message.”
According to the report, a NYDFS spokesperson said the shutdown had “nothing to do with cryptocurrency.” Instead, there was “a major crisis of confidence in the bank’s leadership.” The regulator witnessed a rush of withdrawals from the bank over the weekend, and when it tried to obtain information from the bank’s management, they were unable to provide “reliable and consistent data”, the report said in a paraphrase of the regulator’s statement.
The report seemed to imply that Barney Frank stood by his original claim. He quoted him in response: “I think it was a factor. I’m stumped as to why it was closed,” and claimed that Frank claimed that “bank executives were working to provide data to regulators” but were unable to carry out this task before it was shut down.
Section 606 of the New York Banking Law authorizes the NYDFS to take over a bank for a variety of reasons, including if the bank “has refused, on due demand, to submit its records and affairs for inspection to a department examiner” or “is in an unsafe or unsafe condition to conduct business.”
The NY DFS seized #SignatureBank under Section 606 of the New York Banking Law. Here’s the list of reasons justifying seizures. They are pretty wide-ranging. https://t.co/xY7TQVsltd. pic.twitter.com/zG5xv5FUFA
—Frances ‘Cassandra’ Coppola (@Frances_Coppola) March 14, 2023
Signature Bank closed on March 12. Its closure was part of a wave of bank closings that had begun the previous week and included Silvergate Capital and Silicon Valley Bank. Numerous cryptocurrency-related companies had funds deposited with Signature, including Coinbase, Celsius, and Paxos. The Gemini exchange had previously partnered with Signature, but stated on March 13 that it had no funds in the bank at the time of its closure.
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