Business

Signature Bank Collapsed After Its Crypto Leap

Signature Bank, a New York-based lender with a reputation for being an old-school, traditional bank, went bankrupt after a major shift to cryptocurrency shifted its focus. When he advised others to learn from failures, co-founder Scott Shay did not envision the bank’s demise. It was the country’s third bank failure in a week.

When co-founder Scott Shay mused about success on a podcast early last year, Signature Bank was on a roll. He told the host that staying close to the company as it grew was the best decision he’d ever made. His advice is to always learn from your mistakes.

“They become an extension of you,” he explained. “And if you go in the wrong direction, they can render you incapacitated.”

He had not anticipated Signature’s failure on Sunday when New York regulators intervened in response to a spike in frantic withdrawals. After the catastrophic collapse of Silicon Valley Bank only a few days ago and Washington Mutual in 2008, it was the third-largest bank failure in American history. Yet Shay’s lender was a traditional business; it wasn’t a global powerhouse or a cutting-edge digital icon.

Former executives and investors describe a scrappy, blue-collar group of New York bankers from the boroughs. It was a place with ambition but not prestige, where the branding was an afterthought, and the CEO considered art on the walls to be a sign of complacency.

The company had overcome challenges such as questions about its dealings with Donald Trump’s inner circle, rampant lending to cab drivers, and even accusations of funding slumlords. It may even have a US banking reformer on its board: Barney Frank, co-author of the Dodd-Frank Act and one of the architects of the financial system’s radical overhaul following the 2008 crisis.

State regulators said on Tuesday that they intervened after losing faith in the bank’s management because the bank failed to provide reliable and consistent data as the industry was under pressure.

Depositors fled lenders too closely tied to the downturn in the digital world, leading to the collapse of Signature, the third bank in the nation to fail in a week. A signature, on the other hand, treated cryptocurrency as an afterthought to its long-standing role in New York’s underserved neighborhoods and businesses. For the most part, it had done well as a bank – quietly well-connected, occasionally controversial, and most traditional.

The Justice Department became concerned about all the money pouring in from cryptocurrency ventures at some point. Federal investigators quietly began looking into the firm’s efforts to detect money launderings, such as its scrutiny of account holders and the transactions they made, according to people with knowledge of the situation who asked not to be identified because the inquiries were confidential.

The bank and its employees have not been accused of any wrongdoing, and the investigation may conclude without further action.

Spriha Rai

Recent Posts

JP Nadda Slams Rahul Gandhi’s ‘Match-Fixing’ Claims As ‘Desperation Of Losing’ Polls

Rahul Gandhi's opinion piece appeared in a national daily and sparked political uproar. Opposition parties…

11 hours ago

Poverty In India Reduced Via Tangible Boost In Household Living Standards, Incomes

In 2022–23, poverty under the revised $3.00 line stood at just 5.25 per cent in…

11 hours ago

Chhattisgarh: Seven Maoists Killed In Indravati National Park Operation

Five Maoists were killed in two separate encounters with security forces in Chhattisgarh’s Bijapur district,…

12 hours ago

Carney Invites Modi To G7 Summit, Highlights India’s Global Supply Chain Role

Canadian Prime Minister Mark Carney said the most populous country, with the fifth-largest economy, must…

12 hours ago

RBI Frontloads Rate Cuts To Boost Growth Amid Low Inflation: Crisil

The Reserve Bank of India (RBI) has frontloaded its rate cuts to support economic growth,…

13 hours ago

PM Modi Urges Global Action On Coastal Resilience At Nice Summit

PM Narendra Modi on Saturday called for urgent global action to build infrastructure that can…

13 hours ago