Coinbase, Paxos Disclose Exposure to Failed Signature Bank

Signature Bank emerged late Sunday as the latest institution to collapse amid a series of bank failures, and multiple crypto companies took to Twitter to declare whether they were affected by the government shutdown of the crypto-friendly firm.

Signature Bank was shut down by U.S. regulators, according to a joint statement released by the Federal Reserve, U.S. Treasury, and Federal Deposit Insurance Corporation (FDIC). The regulatory trio said, however, that the bank would reopen Monday, and promised that all depositors in the New York-based institution would be made whole.

The group stated that New York’s state chartering authority had initially shut down Signature Bank and replaced its senior management.

The disclosures, and public calls for them, echoed the series of updates issued on Twitter by companies when Silvergate Bank and then Silicon Valley Bank failed in the last few days.

Silicon Valley Bank Contagion: Crypto Companies Affected Include BlockFi, Circle, Avalanche

Stablecoin issuer and crypto brokerage firm Paxos said it currently holds $250 million at Signature Bank. The company added that it holds insurance for private deposits in excess of the balance Paxos currently has at Signature Bank.

Paxos said it expects the funds will be available Monday when Signature Bank reopens, citing the “extraordinary measures” taken by the government to protect the bank’s customers.

Paxos currently holds $250M at Signature Bank and holds private deposit insurance well in excess of our cash balance and FDIC per-account limits. Seeking private deposit insurance is part of our conservative approach to managing customer assets exceeding FDIC insurance limits.

— Paxos (@PaxosGlobal) March 12, 2023

Following the collapse of Silicon Valley Bank last Friday, Paxos said it had no relationship with the California-based bank, which represents the second-largest failure of a financial institution in U.S. history.

Meanwhile, the U.S.’s leading cryptocurrency exchange Coinbase said that it held a corporate cash balance of around $240 million with Signature Bank as of Friday. The exchange said that it also expects to be fully able to recover the funds.

As of close of business Friday March 10 Coinbase had an approximately $240m balance in corporate cash at Signature. As stated by the FDIC, we expect to fully recover these funds. https://t.co/XY5L7m4RMs

— Coinbase (@coinbase) March 12, 2023

Coinbase had previously signaled on Saturday that it had temporarily suspended USDC conversions after the stablecoin’s issuer Circle disclosed $3.3 billion in exposure to Silicon Valley Bank, accounting for a significant slice of the token’s backing, which totals around $40 billion.

1/ Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.

— Circle (@circle) March 11, 2023

At one point during the weekend, USDC’s price slipped as low as $0.87, but the coin had climbed above $0.99 by late Sunday night, according to CoinGecko, after Circle said it would “cover any shortfall” from the contagion and regulators stepped in to quell concerns of peoples’ access to deposits.

Circle To ‘Stand Behind’ USDC, Cover $3.3 Billion Shortfall Held in Silicon Valley Bank

The decentralized credit bureau Creditcoin claimed it had no exposure to Signature Bank or Silicon Valley Bank.

Binance, meanwhile, disclosed some time ago that Signature Bank was one of the cryptocurrency exchange’s banking partners when it warned that customers would not be able to make SWIFT transfers of less than $100,000. Binance said that only 0.01% of its monthly users were served by the bank at the time.

As of Sunday night, neither Binance nor its CEO Changpeng Zhao had disclosed the company’s current exposure to Signature Bank. Binance did not respond immediately to requests for comment from Decrypt.

The announcement of Signature Bank’s closure coincided with a pledge by federal regulators to protect the U.S. economy through “decisive actions” that would preserve confidence in the country’s banking system.

The Fed, U.S. Treasury, and FDIC stated that clients of Silicon Valley Bank would have total access to their deposits come Monday. The group also stated that the Federal Reserve Board would offer loans to banks to “reduce stress across the financial system,” where high-quality assets like U.S. Treasuries could be posted as collateral.

Silicon Valley Bank’s failure was a potential existential crisis for many tech startups, and multiple crypto firms said they also had exposure to the bank’s failure, including Ripple, BlockFi, Pantera, and Avalanche.

A similar number of firms emerged to say that they were unaffected by Silicon Valley Bank’s troubles, including stablecoin issuer Tether and cryptocurrency exchange Crypto.com. Both companies released statements Sunday night saying they had no exposure to Signature Bank as well.

#tether doesn’t have any exposure to Signature Bank.

— Paolo Ardoino ? (@paoloardoino) March 12, 2023

And Signature Bank Chicago—a business bank that’s unaffiliated with the New York-based institution that failed Sunday—said it has no “cryptocurrency exposure.”

The bank warned that its logo had been incorrectly used during a segment on ABC News, adding that despite the possible confusion, the Chicago-based institution is “stronger than ever.”

This Week with George Stephanopoulos, ABC News incorrectly used our Signature Bank logo in reference to the issues facing Signature Bank New York. There’s no affiliation between the two organizations and our Signature Bank is stronger than ever and has no cryptocurrency exposure.

— Signature Bank (@SignatureBnkChi) March 12, 2023

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