US Senator Links Signature Bank’s Crash With Crypto Adoption

Senator Elizabeth Warren’s Viewpoint On Signature Bank’s fall

Bank would not have fallen if it has refrained from adopting digital currencies, claims Senator Elizabeth Warren.

She is of the view that Signature Bank’s failure was attributable to the bank’s decision to get itself exposed to cryptocurrencies.

Senator Warren also claimed that the crashed bank had thought it could grow bigger and richer if it had offered crypto services.

Although things could have gone in favor of the banking firm, but the regulators were having none of that. The regulators proceeded with taking strict action against the banking firm and brought it down.

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She emphasized that this was the biggest mistake that the bank made ‘otherwise crash would have been avoided’. As of now, the Signature Bank is down and the US Treasury is in the process of returning deposits to the respective depositors.

Senator Warren Writes To Crashed Bank’s CEO

Amongst the US Senators, Senator Warren is seen as the biggest cryptocurrency critic. She has been voicing against the digital asset industry for the past two years.

However, her concern with regard to the industry was exaggerated when FTX’s crypto platform crashed in November 2022. She then took up the aim of either regulating the industry or banning it permanently.

She was also raising doubts over the survival of many crypto platforms and criticized securities regulators for ‘not doing anything’.

Senator Warren was recently interviewed by Yahoo Finance where she acknowledged the crashing of three major US banks, including Signature Bank.

She stated that Signature Bank had compromised its survival when it decided to integrate crypto services.

She further claimed that since the bank failed miserably in taking appropriate measures pertaining to crypto, it was destined to fall.

Senator Warren also told Yahoo Finance that she had officially written a letter which has been addressed to the CEO of Signature Bank.

Public Owes an Explanation

In that letter, she told that Senate has demanded the CEO answer various unanswered questions.

The letter called upon the CEO to present true facts before its customers and explain the economic crisis caused by the bank.

She further stated in the letter that Signature Bank had committed that it was capable of offering crypto-integrated services without fail.

Senator Warren further called upon the CEO to explain who was responsible for exposing the bank to risks and in making ill-founded decisions.

At the end of her letter, she reminded the CEO that he owed an explanation to the public.

Warren’s Accusations

Senator Warren even went on to level accusations against the bank and its CEO. She stated that the bank failed in fulfilling its commitment to Congress that it shall abide by ‘Dodd-Frank Wall Street Reforms’.

She warned the CEO that his bank had promised that it would carefully implement the risk management policies.

She then questioned that ‘given the present state of Signature Bank, it seems risk policies were not followed in letter and spirit’.

She stated that because of the bank’s ignorance, Signature Bank has been overtaken by the state regulator which is managing its affairs.

Warren’s Allegations Pertaining To Bank’s Involvement in Crypto

Senator Warren explained that the bank tried to engage with cryptocurrencies without putting in place the ‘needed safeguards’.

In the absence of such safeguards, the bank should have avoided getting into digital currencies, claimed Warren.

She reminded me that Signature Bank did not learn a lesson from what had happened to its defunct partner FTX in the recent past.

She warned that more than 30% of the funds available with Signature Bank belonged to the customers of FTX. She said that the bank cannot go anywhere until it also returns such funds to their original beneficiaries.

So far Signature Bank’s CEO hasn’t responded to Warren’s letter nor did he make any comment in respect of the same.

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