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The crypto industry has seen a series of closures among the banks lately. First, Silvergate Capital Corporation closed shop, announcing that it would liquidate its bank. Then Silicon Valley bank followed suit, recording a massive decline in its shares and an eventual closure by the regulators.
The New York Department of Financial Services (NYDFS) recently shut down Signature Bank and handed its insurance process to the United States Federal Deposit Insurance Corporation (FDIC). The bank is another institution that supports many crypto firms by holding most of their funds in reserve.
Following the Signature bank crash, many top firms such as Paxos, Coinbase, and Celsius have revealed they had some funds tied up in them.
Top Crypto Firms Reveal Funds In Signature Bank
In a tweet, one of the top exchanges, Coinbase, revealed it had up to $240 million of its funds in Signature Bank. The firm further stated that the funds would be fully recovered, given that the FDIC would protect its clients’ funds.
Coinbase also assured customers that it facilitates clients’ cash transactions with other banks supporting its operations. Most importantly, Coinbase reiterated that its normal operations would continue despite the turbulence in the traditional banking sector.
The second crypto firm that tweeted about its funds was Paxos. The stablecoin issuer revealed it had $250 million in Signature Bank. But in its case, the funds are not insured under FDIC. Paxos used private insurance to cover the whole amount instead of the standard $250,000 per depositor of FDIC.
Further, the stablecoin issuer stated that it maintains relationships with top global banks and keeps pushing to expand its network. It also wrote that private deposit insurance is a conservative approach to managing customers’ assets to exceed the FDIC’s limits.
Notably, Paxos assured customers its risk management approach is prudent, holding 90% of stablecoin reserves in short-term U.S. treasury bills and overnight repo. The approach aims to reduce exposure to the banking system and limit USD cash holdings at depository institutions.
The third announcement came from the Celsius Official Committee of Unsecured Creditors. This is the body representing the interest of Celsius account holders after it went bankrupt in June 2022. In its post, the firm had some funds in Signature bank, but the committee didn’t state the amount.
The silver lining in this banking issue is the $25 billion in funding the U.S. Fed promised to provide for the banks to meet depositors’ needs during this period.
Some Firms Disclose Non-Exposure to Signature Bank
While some top firms have disclosed holding some funds in the now-shuttered bank, others are safe from the issue.
The CEO of one of the top exchanges, Crypto.com, shared a tweet announcing the firm had no exposure to the Signature bank. Also, Tether’s chief technology officer Paolo Ardoino tweeted, announcing that the stablecoin firm didn’t keep its funds in the bank.
Other firms safe from the issue are Theta Network blockchain and Immutable X. Top officials shared posts revealing no exposure to Signature Bank.
Featured image from Pixabay and chart from Tradingview.com
