Coinbase, Celsius and Paxos disclose funds in Signature Bank

The crypto industry faced a significant shockwave with the unexpected closure of Signature Bank on March 12, a move orchestrated by New York regulators and the Federal Deposit Insurance Corporation (FDIC) amid concerns of systemic risk to the U.S. economy. Signature Bank, known for its crypto-friendly services, left several prominent crypto firms, including Coinbase, Celsius, and Paxos, with substantial funds trapped within its operations.

Coinbase, a leading crypto exchange, disclosed via Twitter that it had approximately $240 million in corporate funds at Signature Bank at the close of business on March 10. Despite the sudden closure, Coinbase remains optimistic about fully recovering these funds, supported by the FDIC’s assurances.

Similarly, Paxos, a stablecoin issuer and crypto firm, announced it had $250 million held at the bank. In a move showcasing its cautious approach to asset management, Paxos highlighted its possession of private deposit insurance, significantly exceeding the standard FDIC coverage limit of $250,000 per depositor, ensuring the safety of its funds beyond federal guarantees.

The Celsius Official Committee of Unsecured Creditors, representing account holders of the now-bankrupt crypto lender Celsius, acknowledged that Signature Bank had custody of some of its funds. The committee reassured stakeholders, citing government assurances that all depositors would be made whole. However, the exact amount of funds involved was not disclosed.

In the aftermath of the closure, several crypto companies hastened to clarify their financial positions relative to Signature Bank. Immutable X co-founder Robbie Ferguson and Theta Network co-founder Mitch Liu both confirmed their respective companies had no exposure to the fallen bank. Similarly, Crypto.com CEO Kris Marszalek and Tether’s Chief Technology Officer Paolo Ardoino assured their communities of no financial entanglement with Signature Bank.

The banking sector’s instability also prompted action from the Federal Reserve, which announced a $25 billion program aimed at bolstering liquidity among banks, ensuring they can meet customer needs amidst market turbulence. This intervention followed closely on the heels of measures to protect depositors at Silicon Valley Bank, another institution facing a liquidity crisis that contributed to the broader banking concerns affecting the crypto sector.

The closure of Signature Bank represents a pivotal moment for the crypto industry, underscoring the interconnectedness of traditional banking and digital currency enterprises. As affected firms navigate the aftermath, the broader implications for regulatory oversight and the financial stability of crypto-friendly banking services remain to be seen.