On Sunday, New York State officials shut down one of the biggest pro-crypto banking organisations, Signature Bank, citing “systemic danger” as their justification. The Fed and Treasury came up with an emergency plan to back up all bank deposits in order to stop the losses and stop the crisis from getting worse.
After Silicon Valley Bank and Silvergate Capital shut down on March 12, Signature Bank also went out of business (SVB). The financial crisis has given the allegedly “anti-crypto” US government additional control over the crypto indistry. But the disaster just hasn’t ended despite the bank’s bankruptcy.
Prior to the bank’s collapse, two US Federal agencies were already looking for this. Justice Department officials in Washington and Manhattan were investigating whether Signature had taken sufficient steps to detect potential financial misbehaviour by its clients in light of the revelations from March 15.
Businesses dealing with cryptocurrencies or equivalent payments have frequently received warnings from the Justice Department and banking regulators that they must be diligent in identifying consumers and ensuring that money transactions are for authorised reasons. Any such that raises suspicions must be flagged and reported by the bank to the appropriate authorities.
Authorities claim that when the bank management ceased providing “reliable and consistent” data, they lost faith in them. Due to the fact that no bank employees have been charged of misbehaviour up to this moment, it is uncertain when the inquiry began and whether it resulted in the regulatory closure of the bank. To diminish potential risks to the market, authorities have been advising banks and other authorised businesses to reduce their exposure to cryptocurrencies and other assets.
Authorities will reportedly look into the circumstances surrounding the bank’s demise, especially since security evaluations revealed that Greg Becker, the firm’s CEO and CFO, sold SVB shares two weeks before to the bank’s bankruptcy. Gary Ginsely, the head of the SEC, promised that the organisation “would investigate and initiate enforcement proceedings if we identify violations of the federal securities laws,” even though no announcements have been made publicly.