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Scott Tripp from Blockcast and Alex Cooper from Footprint Analytics present a new perspective on the current banking crisis and the recent closure of Signature Banking. To begin, we will discuss the commodity report and then delve into our theories regarding what may have led to these events.
In February 2023, it was reported that Signature Bank was facing a lawsuit from investment firm Statistica Capital. The suit alleged that Signature Bank had facilitated the collapse of crypto exchange FTX by allowing it to commingle customer accounts with its blockchain network, despite observing suspicious transfers through its Signet blockchain payment network. The complaint also claimed that Signature had "actual knowledge" of the FTX fraud since at least June 2020 and "substantially facilitated" the fraud by promoting the exchange publicly and failing to close or limit accounts in violation of its terms of service. Signature Bank has not yet issued a statement regarding the lawsuit.
The implications of these allegations are speculative, but they may have played a role in the failure of Signature Bank and its subsequent freeze by the Fed. In a separate article, Moody’s downgraded the U.S. banking sector from "stable" to "negative" following the collapse of three banks within seven days. Silvergate Bank decided to voluntarily liquidate, and Silicon Valley Bank experienced a large bank run, leading to its placement into receivership by the FDIC. New York regulators also revealed that the FDIC had taken over Signature Bank on Sunday. Moody’s cited the rapid deterioration in the operating environment following deposit runs and bank failures, and highlighted risks in U.S. banks’ asset-liability management (ALM) exacerbated by rapidly rising interest rates. Moody’s also noted that while the U.S. government had made depositors whole, the decline in depositor and investor confidence highlighted potential funding, liquidity, earnings, and capital risks for banks.
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