You may have noticed that several American banks have run into problems and collapsed in recent days. Among those banks is also Signature Bank, a crypto-friendly bank. The bank was reportedly shut down as part of a larger attack on crypto, but according to Bloomberg the bank was already under investigation before the collapse because it would not take sufficient measures to prevent money laundering.
Problems at Signature Bank
The crypto industry is often accused of not checking the origin of funds enough. In most Western jurisdictions there are now strict and clear rules about this, but that does not alter the fact that sometimes things do not go as they should.
In the case of Signatures Bank, this seems to be the case, because both the Justice Department and the Securities and Exchange Commission kept a close eye on the bank. That is now too late, because the bank went under as a result of the interest rate hikes of the US Federal Reserve.
Bloomberg reports that Signature Bank and its employees have not yet been charged and that it may remain that way. A lawsuit was initiated by a group of Signature Bank shareholders on March 14, because the bank claimed to be “financially strong” three days before its failure.
Investors choose bitcoin and ethereum
On the one hand, it is not good for a bank to make such claims when the truth is otherwise. But on the other hand, a bank cannot afford to openly say that it is heading for financial ruin.
Naturally, as soon as such news comes out, all the bank’s customers withdraw their capital and a bank run ensues. In that respect, banks are always in a difficult position when it comes to these kinds of expressions.
For bitcoin it is a positive development so far, because the collapse of the banks means that confidence in the traditional financial system is further eroding. In recent days we have seen a huge flight from the traditional banking system to alternatives such as bitcoin and ethereum.