IMG-LOGO

US Senator: Signature Bank Collapsed Because It Embraced Crypto Customers Without Sufficient Safeguards

News Feed - 2023-03-17 10:03:28

US Senator: Signature Bank Collapsed Because It Embraced Crypto Customers Without Sufficient Safeguards


U.S. Senator Elizabeth Warren alleges that Signature Bank failed because it “bought into its get-rich-quick narrative” and “embraced crypto customers with insufficient safeguards.” Emphasizing that the bank took “excessive risk,” the senator demanded answers from the CEO of Signature Bank regarding “the economically disastrous outcomes you created.” Senator Elizabeth Warren’s Letter to Signature Bank’s CEO


U.S. Senator Elizabeth Warren (D-MA) has attributed the failure of Signature Bank to its acceptance of crypto customers without having sufficient safeguards, Yahoo Finance reported Thursday. Signature Bank was seized by the New York State Department of Financial Services last Sunday, becoming the third-largest bank in the U.S. to fail.


In a letter to Signature Bank CEO Joseph DePaolo, Senator Warren wrote: You owe your customers and the public an explanation for the economically disastrous outcomes you created: you worked hard to weaken the rules, promised that they ‘bode well’ for your bank — and then destroyed it with bad decision-making and excessive risk-taking.


“Congress and the public must learn the lessons from the failure of Signature Bank,” the senator stressed.


The lawmaker argued that Signature Bank supported efforts to curtail capital requirements stipulated in the Dodd-Frank Wall Street reform law, the publication conveyed, adding that the bank also directed thousands of dollars in campaign contributions to leaders of efforts to relax bank regulation in Congress.


“Despite assurances made to Congress that mid-sized banks like Signature Bank would be able to manage risk independently, it has since become clear that your bank was wholly unequipped to do so, and that failure resulted in the bank being shut down and taken over by government regulators,” the senator told DePaolo. Signature Bank Allegedly ‘Embraced Crypto Customers With Insufficient Safeguards’


Senator Warren further alleged that Signature Bank took on “excessive risk” to boost its bottom line by serving crypto clients, such as the Nasdaq-listed crypto exchange Coinbase, blockchain infrastructure platform Paxos, and collapsed crypto exchange FTX. By December last year, crypto clients accounted for about 30% of Signature Bank’s total deposits. Warren stated: Signature Bank bought into its get-rich-quick narrative … Signature Bank was caught short because it embraced crypto customers with insufficient safeguards.


According to Bloomberg, the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) were already investigating Signature Bank’s work with cryptocurrency clients before regulators took possession of the bank last Sunday. The news outlet noted that the DOJ was focusing on whether the bank had taken adequate measures to identify potential money laundering activities by its clients. Tags in this story Elizabeth Warren, Elizabeth Warren Signature Bank, Elizabeth Warren Signature Bank CEO, Elizabeth Warren"s letter, senator from Massachusetts, Signature Bank


What do you think about Senator Elizabeth Warren claiming that Signature Bank collapsed because it embraced crypto clients without adequate safeguards? Let us know in the comments section below. Kevin Helms


A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography. Court Dismisses Former Monero Developer"s Bid to Have His Extradition to South Africa Declared Illegal REGULATION | 1 day ago India, UAE Collaborate to Boost Cross-Border Central Bank Digital Currency Transactions REGULATION | 1 day ago


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleEuropean Commissioner Says Impact of SVB Collapse ‘Limited’ as Credit Suisse Drags Down Banking Stocks Next articleArgentina Registers 6.6% CPI in February; Inflation Numbers Blast Past 100% YoY for First Time Since the 90s Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItOman to Incorporate Real Estate Tokenization in Virtual Assets Regulatory Framework


Real estate tokenization is set to be incorporated into Oman Capital Markets Authority (OCMA)"s virtual asset regulatory framework. According to an advisor with the authority, the tokenizing of real estate will open investment opportunities for local and foreign investors. Real ... read more.Following a Brief Fee Spike, Gas Prices to Move Ethereum Drop 76% in 12 Days Draft Law Regulating Aspects of Crypto Taxation Submitted to Russian Parliament NFT Sales Volume Saw a Small Uptick This Week — Moonbirds, Mutant Apes Take Top Sales Fidelity Investments Launches Crypto, Metaverse ETFs — Says "We Continue to See Demand"