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The backstory: New York-based lender Signature Bank was founded in 2001 with a mission to be more business-friendly than the big banks, and it was crushing it.
Since then, it expanded to the US west coast and even ventured into the thrilling crypto world in 2018. Thanks to its digital-asset-related customers, this savvy move led to a dramatic increase in deposit growth. By last September, about a quarter of all its deposits came from crypto, but the bank did say in December it would reduce these by US$8 billion.
More recently: Two major players in the banking industry – Silvergate Capital Corp and SVB Financial Group's Silicon Valley Bank have taken a hit recently. SVB's collapse was quickly followed by Signature Bank's.
Silvergate is under investigation by the US Justice Department over its dealings with the now-defunct FTX exchange and Alameda Research. At the same time, SVB is being probed by federal prosecutors and the Securities and Exchange Commission (SEC ) for potential trading rule violations by some execs.
The development: Over the weekend, regulators took over Signature Bank. But US prosecutors were already investigating the bank's links to cryptocurrency clients, even before the takeover. The focus was on whether the bank was doing enough to prevent money laundering by its clients. And to top it off, the SEC was also looking into the bank.
So far, there haven't been any allegations of wrongdoing against the bank or its staff, so it's unclear where the investigation will end up going. Now, the Federal Deposit Insurance Corporation (FDIC) is on the lookout for a buyer to take over Signature Bank.
“We will investigate and bring enforcement actions if we find violations of the federal securities laws,” said Gary Gensler, the chair of the US Securities and Exchange Commission.
“The FBI and our partners remain steadfast in our commitment to keeping cryptocurrency markets – as with any financial market – free from illicit activity,” said Michael Driscoll, the assistant director in charge of the FBI New York field office, after the US brought charges against the owner of a crypto exchange in January.
“We’re not exiting the space,” said Eric Howell, then the bank’s chief operating officer in December. “We’re going to be involved but we’re going to be involved in a much more thoughtful way moving forward.”