Coinbase Confirms $240 Million Corporate Cash Balance with Signature Bank Amid Lender Closure
Why Trust Cryptonews
Ad Disclosure
We believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. Read more
Coinbase, one of the largest cryptocurrency exchanges in the world, has announced that it has millions of dollars in corporate cash balance with Signature Bank, which was recently shut down.
The news came via a Twitter thread on March 13, revealing that Coinbase had around $240 million with the bank as of the close of business on March 10.
The company, however, tweeted that,
“As stated by the FDIC, we expect to fully recover these funds.”
Regulators closed New York-based Signature Bank on Sunday, two days after closing Silicon Valley Bank in a massive collapse affecting billions in deposits.
The Federal Deposit Insurance Corporation (FDIC) took control of Signature, which had $110.36 billion in assets and $88.59 in deposits at the end of 2022, per the New York state’s Department of Financial Services data, Reuters reported.
Coinbase said that,
“All client cash at banks continues to be protected by FDIC pass-through insurance. Due to FDIC’s hold on Signature’s transactions, we’re currently facilitating all client cash transactions with other banking partners.”
It did not name these “other” partners.
Signature’s collapse was the third-largest failure in US banking history, Silicon Valley Bank’s shutdown was the second, and the first was Washington Mutual, which collapsed during the 2008 financial crisis.
On March 12, a joint Statement by Secretary of the Treasury Janet Yellen, the Federal Reserve (Fed) Board Chair Jerome Powell, and FDIC Chairman Martin Gruenberg, said that the FDIC received approval to “complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors.” Depositors will be able to access “all of their money starting Monday, March 13,” while no losses associated with this move will be borne by the taxpayer.
It added that,
“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole [and] no losses will be borne by the taxpayer.”
@federalreserve @USTreasury @FDICgov issue statement on actions to protect the U.S. economy by strengthening public confidence in our banking system, ensuring depositors' savings remain safe: https://t.co/YISeTdFPrO
— Federal Reserve (@federalreserve) March 12, 2023
The statement added that shareholders and “certain unsecured debtholders” would not be protected, while senior management had been removed. Additional funding will be made available to eligible depository institutions to help assure banks that they have the ability to meet all depositors’ needs.
“Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law,” it said.
The regulators’ actions were designed to reduce spillover effects from the depositor outflows, a senior Treasury official reportedly said.
As reported in late January, Signature Bank set the $100,000 minimum limit in an effort to reduce its exposure to the crypto sector. Already in December last year, it had stated that it intended to reduce its exposure to clients operating in the crypto space by shedding about $10bn of deposits.
This decision came after the FTX collapse in November, as well as a warning issued to banks by the FDIC, the Fed, and the Office of the Comptroller of the Currency (OCC) about risks in the crypto sector.
Along with the troubled Silvergate, Signature Bank was known as one of the biggest crypto-friendly banks in the US.
Meanwhile, Coinbase went on to say that,
“Despite the turbulence we have seen in the traditional banking sector recently, Coinbase continues to operate as usual. At Coinbase all client funds continue to be safe and accessible including USDC conversions which will resume on Monday.”
On March 11, the exchange said that it was “temporarily pausing” USDC/USD conversions over the weekend while banks are closed.
It explained this move by saying that during periods of heightened activity, “conversions rely on USD transfers from the banks that clear during normal banking hours,” adding that customer assets remained safe and available for on-chain sends.
____
Learn more:
– Lawmakers Seek Answers from Fed, FDIC on Silicon Valley Bank Collapse
– MicroStrategy Claims Minimal Exposure as Crypto.com, Coinbase, and Gemini Pause Transactions with Silvergate Bank – What’s Going On?
– Exchange Stablecoin Wars Hot Up – Coinbase to Suspend BUSD Trading on March
– Analysts Expect Coinbase Revenue to Drop 75% for Last Quarter
– How To Send Ethereum from Coinbase to MetaMask Wallet
– Why It Is Risky To Leave Your Cryptocurrency In an Exchange
- Trump Appoints PayPal Veteran David Sacks as ‘White House AI and Crypto Czar’
- JPMorgan CEO Jamie Dimon Compares Bitcoin to Smoking
- Crypto-Based Prediction Platform Polymarket Banned in Singapore for Unlicensed Gambling
- New Hampshire and North Dakota Latest U.S. States to Propose Bitcoin Reserves
- Indian Crypto Exchange Mudrex Halts Crypto Withdrawals, Faces Community Backlash
More Articles
in numbers
