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Signature Bank Requests Crypto Clients to Close Accounts Within a Week

New York Community Bank’s acquisition for most of Signature’s deposits and loans has been completed, as per the FDIC’s receivership of the company. This has initiated the bidding process for the remaining business operations and branding associated with Signature. 

The FDIC took over Silvergate and SVB following their respective failures. And, this action may have been in response to the ongoing investigation into Signature Bank’s operations, during which representatives had difficulty providing accurate information on the losses incurred after SVB’s bankruptcy. 

About the Divestment Moving Forward 

Various rumors have circulated suggesting that any prospective buyer of Signature Bank had to agree to discontinue involvement in the cryptocurrency sector. However, this was not the case; Signature Bank, in collaboration with Silvergate, had offered considerable assistance to crypto businesses and was not obligated to withdraw from the crypto industry.

The Federal Deposit Insurance Corporation (FDIC) reported that no divestment was necessary; however, they cautioned potential customers of the risks associated with cryptocurrency. Subsequently, New York Community Bancorp and its subsidiary Flagstar Bank acquired Signature Bank’s loans and most of its deposits, excluding approximately $4 billion in deposits from cryptocurrency customers.

The FDIC retained receivership of the deposits, as well as Signet, a payment network created by Signature bank for cryptocurrency payments. 

About the Closure Notice 

After this notice, given by Signature Bank, it is no longer possible for crypto clients to make alternative arrangements to stay in business with the bank. The FDIC has also issued a notification requesting Signature Bank’s remaining cryptocurrency clients to close their accounts by April 5th. Companies that have not made alternative banking arrangements by that date will receive a check to be cashed out at a later date. 

However, the FDIC has declined to comment on the current news regarding the potential liquidation of crypto-related deposits, or on the future of Signet, which remains under the FDIC’s control until further notice.