Apparently, Crypto-friendly Signature Bank was under investigation by two US government agencies before its bankruptcy.
According to a March 15 Bloomberg report citing people familiar with the matter, Justice Department investigators were examining whether Signature took appropriate steps to detect possible money laundering by its clients.
The regulator was particularly concerned about whether the bank took preemptive steps to monitor transactions for “signs of criminality” and adequately investigated account holders..
According to two anonymous sources cited by Bloomberg, the Securities and Exchange Commission (SEC) was also “investigating” the bank. No details have been provided about the nature of the SEC investigation..
It is unclear when the investigations began or what effect, if any, they had on the recent decision by New York state regulators to close the bank..
It has been reported that Signature and its staff are not accused of wrongdoing and that investigations can be concluded without the SEC or Department of Justice (DOJ) filing charges or taking further action.
The report comes after Signature shareholders filed a class action lawsuit against the bank and its former executives on March 14 for claiming it was “financially strong,” just three days before it was forcibly closed..
Barney Frank, a former Signature Bank board member, said on March 13 that regulators wanted to “send a very strong anti-crypto message”.
Frank added that crypto-friendly bank became “poster boy” as there was no “fundamentals-based insolvency”.
Signature, which was shut down on March 12, was part of a series of bank closures that also included Silvergate Capital and Silicon Valley Bank (SVB)..
Apparently, the Department of Justice and the SEC have launched separate investigations into the bankruptcy of Silvergate Capital and SVB.
It has been reported that Regulators will examine the events leading up to the bankruptcy, including scrutiny of securities records that revealed the sale of SVB shares by company CEO Greg Becker and chief financial officer Daniel Beck, which had place two weeks before his fall.
The SEC has not formally commented on these matters, but its chairman, Gary Gensler, said on March 12 that he “will investigate and take enforcement action if we find violations of federal securities laws.”.
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