Feds Were Looking Into Signature Bank's Crypto Client Business Dealings Before Collapse: REPORT

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  • Source: Wayne Dupree
  • 03/15/2023
A representative for the New York State Department of Financial Services said on Tuesday that the closure of Signature Bank, the third US financial institution to fail in as few days, had "nothing to do with cryptocurrency," according to Reuters. Tuesday night, Bloomberg reported that federal authorities were looking into the bank's interactions with Bitcoin clients even before it went out of business, raising the possibility that this might not be the case.

According to sources, DOJ investigators are also looking into how closely Signature monitored potential money laundering schemes, including how rigorously it screened applicants for new accounts and kept track of transactions that raised red flags.


According to sources, the Securities and Exchange Commission is conducting its own investigation. It is unclear when the inquiry began or if it had any bearing on the NYSDFS' decision to close the bank over the weekend. Neither Signature Bank nor the FDIC, which is currently in possession of the bank and looking for a buyer, have yet to respond to the Bloomberg report.

The New York regulators have just stated that the bank's failure to deliver "reliable and consistent data" caused them to lose confidence in Signature. The SEC is also keeping quiet: Gary Gensler, the chairman, just stated that his office would "examine and bring enforcement measures" if it discovered that the federal securities laws had been broken on Sunday.

Authorities have been raising the alarm about cryptocurrencies for some time, cautioning banks to be more vigilant in observing crypto transactions and that the digital money presents a chance for unlawful behavior.

While federal investigators are also looking into the sale of stock by executives at Silicon Valley Bank in the days leading up to its own collapse—the largest bank failure since the 2008 financial crisis, per Fox News—federal investigators are also focusing on Silvergate Capital Corporation, which specialized in crypto clients and its work with the defunct FTX exchange. Signature isn't the only bank that has recently been shuttered and is under scrutiny.

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