Signature Bank’s Crypto Clients Must Close Accounts Within A Week

The notice comes after NYCB’s purchase of most of Signature’s deposits and loans.

After Signature was placed in receivership by the FDIC, the process of bidding for its remaining business operations, as well as the branding associated with the company, kicked off.

The FDIC’s takeover came shortly after the collapse of both Silvergate and SVB. The decision was possibly due to the ongoing investigation into Signature’s dealings, during which Signature Bank representatives could not provide accurate data regarding the deficit incurred after SVB went bankrupt.

Gruenberg: Signature Bank lost 20% of its deposits in a matter of hours on March 10, the day SVB was shut.

Signature had a negative balance at the Fed at the close of business, and “bank management could not provide accurate data regarding the amount of the deficit.” pic.twitter.com/679dNnnrzJ

— Nick Timiraos (@NickTimiraos) March 27, 2023

Divestment Decided By Bank

At the time, there were rumors that any company that intended to buy Signature Bank had to agree to divest from the crypto industry. Signature Bank, which, alongside Silvergate, provided much of the infrastructure for crypto businesses, was, in reality, not forced to divest from the crypto industry.

According to the FDIC, no divestment was required, although they did notify potential customers regarding the risks of crypto.

Shortly after that, the New York Community Bancorp took over some of Signature’s loans and most of its deposits through their subsidiary Flagstar Bank. Notoriously excluded from the deal, however, were about $4 billion in deposits from crypto customers.

These deposits remained in receivership at the FDIC, along with Signet, Signature banks’ payment network developed for cryptocurrency payments.

Notice Of Account Closure Given

However, any hopes of crypto clients finding some alternative arrangement to remain in business with Signature Bank have now been dashed.

Yesterday evening, the FDIC sent out a notice to Signature’s remaining crypto clients that they must close all their accounts at the bank by the 5^th of April. In case new banking arrangements have not been made by the companies involved, a check will be sent to the business’s headquarters, allowing them to cash out at a later date.

“We are reaching out to the depositors from Signature whose deposits were not included in NYCB’s bid. Flagstar’s bid did not include about $4 billion in deposits related to Signature’s digital-asset business. Those are the deposits we are encouraging customers to move before April 5. If they have not by that day, we will mail checks to the address on record.”

Although the current news indicates that crypto-related deposits will be liquidated shortly, the FDIC declined to comment on the fate of Signet, which will remain under FDIC control until further notice.