Leading crypto exchange Coinbase disclosed it lost around $240 million in Signature Bank shut-down on Mar. 12.
Paxos and Celsius also announced they lost money in the Sunday Signature Bank shutdown. Companies may need to rely on the Federal Deposit Insurance Corporation (FDIC) to recover lost funds.
Coinbase
Coinbase disclosed the amount lost on its official Twitter account by tweeting:
“Despite the turbulence we have seen in the traditional banking sector recently, Coinbase continues to operate as usual. At Coinbase all client funds continue to be safe and accessible including USDC conversions which will resume on Monday.”
New-York-based Signature Bank was closed by the FDIC on Sunday, Mar. 12. While announcing the shut down; the FDIC also noted that it would compensate the depositors by stating:
“Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.”
Citing this, Coinbase said it currently facilitates client transactions with multiple banking partners and expects to recover the lost funds fully.
Paxos and Celsius
Paxos and Celsius also announced their losses via their official Twitter accounts around the same time as Coinbase.
Paxos said it held $250 million in Signature Bank, which it expects to be refunded mainly by the FDIC. The company also reminded that all depositors’ funds are fully backed 1:1 with the U.S. dollar and therefore are “redeemable at all times.”
On the other hand, Celsius didn’t reveal much information about the amount it lost in the shutdown. It only acknowledged the situation and assured its users about recovering the loss by citing the FDIC document.
Turmoil in the banking sector
Signature Bank was one of the two giants of the crypto banking sector, the other being Silvergate Bank. During the bear market, Signature Bank tried to distance itself from the crypto space and publicized that they are not “not just a crypto bank.” It later announced restricting limits to crypto transactions.
This move potentially pushed Silvergate toward the other end of the balance. However, the FTX collapse had significantly hit the bank, leading to insolvencies earlier this month. Ultimately, the bank stopped operations and underwent liquidation on Mar. 8. Silvergate’s bankruptcy left Signature as the only remaining option for crypto banking services, which increased Signature’s workload. Reflecting on the recent developments, it is fair to say that the crypto banking sector is experiencing significant turmoil.
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