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U.S. Senator Elizabeth Warren alleges that Signature Bank failed because it \u201cbought into its get-rich-quick narrative\u201d and \u201cembraced crypto customers with insufficient safeguards.\u201d Emphasizing that the bank took \u201cexcessive risk,\u201d the senator demanded answers from the CEO of Signature Bank regarding \u201cthe economically disastrous outcomes you created.\u201d<\/strong><\/p>\n U.S. Senator Elizabeth Warren (D-MA) has attributed the failure of Signature Bank to its acceptance of crypto customers without having sufficient safeguards, Yahoo Finance reported Thursday. Signature Bank was seized<\/a> by the New York State Department of Financial Services last Sunday, becoming the third-largest bank in the U.S. to fail.<\/p>\n In a letter to Signature Bank CEO Joseph DePaolo, Senator Warren wrote:<\/p>\n You owe your customers and the public an explanation for the economically disastrous outcomes you created: you worked hard to weaken the rules, promised that they \u2018bode well\u2019 for your bank \u2014 and then destroyed it with bad decision-making and excessive risk-taking.<\/p>\n<\/blockquote>\n \u201cCongress and the public must learn the lessons from the failure of Signature Bank,\u201d the senator stressed.<\/p>\n The lawmaker argued that Signature Bank supported efforts to curtail capital requirements stipulated in the Dodd-Frank Wall Street reform law, the publication conveyed, adding that the bank also directed thousands of dollars in campaign contributions to leaders of efforts to relax bank regulation in Congress.<\/p>\n \u201cDespite assurances made to Congress that mid-sized banks like Signature Bank would be able to manage risk independently, it has since become clear that your bank was wholly unequipped to do so, and that failure resulted in the bank being shut down and taken over by government regulators,\u201d the senator told DePaolo.<\/p>\n Senator Warren further alleged that Signature Bank took on \u201cexcessive risk\u201d to boost its bottom line by serving crypto clients, such as the Nasdaq-listed crypto exchange Coinbase, blockchain infrastructure platform Paxos, and collapsed crypto exchange FTX. By December last year, crypto clients accounted for about 30% of Signature Bank\u2019s total deposits. Warren stated:<\/p>\n Signature Bank bought into its get-rich-quick narrative \u2026 Signature Bank was caught short because it embraced crypto customers with insufficient safeguards.<\/p>\n<\/blockquote>\n According to Bloomberg, the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) were already investigating Signature Bank\u2019s work with cryptocurrency clients before regulators took possession<\/a> of the bank last Sunday. The news outlet noted that the DOJ was focusing on whether the bank had taken adequate measures to identify potential money laundering activities by its clients.<\/p>\nSenator Elizabeth Warren\u2019s Letter to Signature Bank\u2019s CEO<\/h2>\n
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Signature Bank Allegedly \u2018Embraced Crypto Customers With Insufficient Safeguards\u2019<\/h2>\n
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