Signature encryption customers have one week to remove funds; The sign is for sale
Woodmere, NY: Photo of a branch of Signature Bank in Woodmere, New York on March 13, 2023. Regulators announced that the New York-based bank had failed and was seized. Signature Bank is the third largest bank failure in US history with more than $110 billion in assets. (Photo by Howard Schnapp/Newsday RM via Getty Images)
Newsday via Getty Images
Signature Bank’s crypto clients get the jump-start as Federal Deposit Insurance Corp. (FDIC) says depositors whose accounts were not included in the Flagstar Bank sale have until April 5 to close their accounts, giving them just one week to find new banking partners.
“If customers with deposits not taken over by Flagstar Bank have not moved their money by then, the FDIC will mail a check to their address of record,” David Barr, assistant director of communications at the FDIC, said in an email to Forbes.
Signature was one of two main banks that allowed customers to transfer conventional funds to and from the cryptocurrency world. It was closed on March 19 after runs on Silicon Valley Bank and crypto-centric Silvergate Bank, reflecting depositors’ unease about the safety of financial institutions exposed to the digital asset and venture capital sectors.
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The shutdown of Signature and the sale of most of its business was accomplished quickly, and the exclusion of the crypto operations lends credence to the idea that the government was sending a message to banks to stay away from digital assets. That raises the question of what the FDIC will do with Signet, the transfer system that bridged the crypto and traditional financial worlds. Signet and a similar service from Silvergate accounted for the bulk of that business.
The sign is “left with the condominium association and the FDIC will market it,” Barr says, though he did not disclose whether any potential buyers have expressed interest.
About $4 billion in digital asset-related deposits were excluded from the sale to Flagstar, a subsidiary of New York Community Bank, along with $11 billion in commercial debt for rent-stabilized apartments in New York City and $27 billion in loans to venture capital and private – limited liability companies.
While Signature’s crypto customers were aware since the sale that they would have to look around for other banking partners, the relatively short timeframe was only revealed to customers yesterday.
“We have alternative options available to us, and we’re in the process of developing new banking relationships as well,” says Charlie Schumacher, vice president of corporate communications at Marathon Digital. The Bitcoin miner had $142 million in cash deposits in his signature account.
Public cryptocurrency exchange Coinbase
“Coinbase, or its customers, have lost some funds in this particular bank failure,” a source familiar with Coinbase’s banking strategy told me. Forbes, adding that the company had already started looking for alternative banking options after Signature’s crypto customers were not part of the sale.
Paxos had 250 million dollars on his account at the time of signature closure. It has not responded Forbes’ request for comments on the status of these funds.
Crippled crypto lender Celsius
