The Failure Of Signature Bank Was Caused By Its Acceptance Of Cryptocurrency Users Without Enough Safeguards.

Asserting that the bank took "excessive risk," U.S. Senator Elizabeth Warren demanded an explanation from the CEO of Signature Bank regarding "the economically disastrous outcomes you created." Warren claims that the bank failed because it "bought into its get-rich-quick narrative" and "embraced crypto customers with insufficient safeguards."

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Sen. Elizabeth Warren's letter to the CEO of Signature Bank

According to a report on Thursday by Yahoo Finance, U.S. Senator Elizabeth Warren (D-MA) blamed the bankruptcy of Signature Bank on its admission of cryptocurrency customers without having adequate security. The third-largest bank in the United States to fail, Signature Bank was taken by the New York State Department of Financial Services on Sunday.

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In a memo to Signature Bank CEO Joseph DePaolo, Senator Warren decided to write: You end up owing your clients and the general public an elaboration for the economically damaging outcomes you created: you worked very hard to weaken the rules, promised that they 'bode well' for your bank — and then destructed it with poor decision and excessive risk-taking.

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The senator emphasized that both Congress and the general public needed to learn from the demise of Signature Bank.

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The publication reported that the lawmaker claimed that Signature Bank supported efforts to reduce capital requirements mandated by the Dodd-Frank Wall Street reform law and that the bank also gave thousands of dollars in campaign contributions to individuals leading efforts to loosen bank regulation in Congress.

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The senator explained to DePaolo that despite assurances given to Congress that semi banks like Signature Bank would've been able to manage risk autonomously, it has since emerged that your bank was completely unprepared to do so. As a result of this failure, the bank was shut down and handed over by government regulators.

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According to allegations, Signature Bank "embraced Crypto customers with inadequate safeguards."

Senator Warren further claimed that Signature Bank took on "extreme risk" in order to serve cryptocurrency clients like the defunct crypto exchange FTX, the Nasdaq-listed Coinbase, and blockchain infrastructure provider Paxos. By December of last year, roughly 30% of Signature Bank's total deposits came from cryptocurrency consumers. As Warren said:

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When it came to protecting its crypto consumers, Signature Bank fell short because it got into its get-rich-quick narrative.

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Trade Algo claims that the U.S. When regulators took control of the bank last Sunday, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) were already looking into Signature Bank's interactions with bitcoin clients. According to the news source, the DOJ was particularly interested in whether the bank had taken sufficient steps to uncover suspected money laundering by its clients Trade Algo claims that the U.S. When regulators took control of the bank last Sunday, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) were already looking into Signature Bank's interactions with bitcoin clients. According to the news source, the DOJ was particularly interested in whether the bank had taken sufficient steps to uncover suspected money laundering by its clients..