Crypto Exchange Coinbase and Others Reveal Funds in Shuttered Signature Bank
The crypto industry has seen a number of closures among banks recently. First, Silvergate Capital Corporation closed up shop, announcement that it would liquidate its bank. Then Silicon Valley bank followed suit, recorded a massive decline in the shares and a possible shutdown of the regulators.
New York Department of Financial Services (NYDFS) recently close Signature Bank and handed over its insurance process to the United States Federal Deposit Insurance Corporation (FDIC). The bank is another institution that supports many crypto firms by keeping most of their funds in reserve.
After the Signature bank crash, many top firms such as Paxos, Coinbase and Celsius have revealed that they had some funds tied up in them.
Top crypto firms list funds in signature bank
In a chirping, one of the top exchanges, Coinbase, revealed that it had up to $240 million of its funds in Signature Bank. The firm further stated that the funds would be fully recovered, given that the FDIC would protect customers’ funds.
Coinbase also assured customers that it facilitates customers’ cash transactions with other banks that support its operations. Most importantly, Coinbase reiterated that its normal operations would continue despite the turbulence in the traditional banking sector.
The other crypto firm that tweeted about its funds was Paxos. The stablecoin issuer revealed that it had $250 million in Signature Bank. But in their case, the funds are not insured under the FDIC. Paxos used private insurance to cover the full amount instead of the standard $250,000 per depositor to the FDIC.
Furthermore, the stablecoin issuer stated that it maintains relationships with top global banks and continues to push to expand its network. It also wrote that private deposit insurance is a conservative approach to managing customers’ assets to exceed the FDIC’s limits.
In particular, Paxos assured clients that its risk management approach is prudent, holding 90% of its stablecoin reserves in short-term US T-bills and overnight repos. The approach aims to reduce the exposure to the banking system and limit the cash holdings in USD at deposit institutions.
The third announcement came from the Celsius Official Committee of Unsecured Creditors. This is the body representing the interests of Celsius account holders after it went bankrupt in June 2022. In its submission, the firm had some funds in Signature bank, but the committee did not state the amount.
The silver lining in this bank issue is $25 billion in financing by the US Fed promised to give for the banks to cover the depositors’ needs during this period.
Some firms disclose non-exposure to signature banking
While some top firms have revealed they have some funds in the now-closed bank, others are safe from the issue.
The CEO of one of the top exchanges, Crypto.com, shared a chirping announced that the firm had no exposure to the Signature bank. Tether’s chief technology officer Paolo Ardoino also tweeted, announcing that the stablecoin firm was not keeping its money in the bank.
Other companies that are safe from the problem are Theta Network blockchain and Immutable X. Top officials shared posts that revealed no exposure to Signature Bank.
Featured image from Pixabay and chart from Tradingview.com
