- The US Securities and Exchange Commission was investigating Signature
- DOJ was monitoring newly opened accounts and checking for signs of illegal transactions
- Clients requested withdrawals of over $10 billion in total on Friday
The US Department of Justice in Manhattan and Washington was looking to prevent money laundering and investigating insufficient monitoring at Signature Bank to this end before it closed down, CoinDesk wrote, citing Bloomberg, who in turn cited insiders. Bloomberg also claimed the US Securities and Exchange Commission was investigating Signature.
The bank, which New York state regulators shut down on March 12, had a few crypto clients. The DOJ was monitoring newly opened accounts and checking for signs of illegal transactions, insiders told Bloomberg.
Was the bank shuttered because of crypto?
Signature Bank was not closed down because of crypto, the NY Department of Financial Services said on Tuesday, refuting allegations that the regulator had taken Signature over due to anti-crypto sentiments. An NYDFS spokesperson said:
The decisions made over the weekend were not crypto related. Signature was a traditional commercial bank with a wide range of activities and customers. DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space.
Signature Bank board member Barney Frank did not agree. The former legislator, who lent his name to the Dodd-Frank Act of 2010, told leading media that regulators shut Signature down precisely because of its crypto clients. He told CNBC on Monday:
Regulators wanted to send a very strong anti-crypto message. We became the poster boy because there was no insolvency based on the fundamentals.
Depositors withdrew $10B in one day
According to the NYDFS, Signature had a very high number of pending withdrawal requests last weekend, even after the bank run on Friday. Frank admitted depositors requested withdrawals of over $10 billion in total on Friday.
The DFS explained that Signature had failed to provide consistent and reliable data, leading to a major crisis of confidence in its management. The regulator decided to take over the bank and hand it to the FDIC when it emerged it could no longer do business in a safe and sound manner.
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