Bankruptcy

NY regulators say Signature Bank closure unrelated to cryptocurrency

Published

2 weeks ago

March 14, 2023

NY regulators say Signature Bank closure unrelated to cryptocurrency Mike Dalton · 2 hours ago · 2 min read

The New York State Department of Financial Services said that its closure of Signature Bank was unrelated to the bank’s crypto ties.

2 min read

Updated: March 14, 2023 at 10:53 pm

Cover art/illustration via CryptoSlate

The New York State Department of Financial Services (NYDFS) said on March 14 that its closure of Signature Bank was not related to the bank’s crypto industry ties.

NYDFS denies Signature was closed over crypto

Though Signature worked extensively with crypto firms, a representative has denied that the NYDFS’ decision to shut down Signature was related to that activity.

Statements cited by various outlets including Fortune read:

“The decisions made over the weekend had nothing to do with crypto…The decision to take possession of the bank and hand it over to the FDIC was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”

Previously, Signature board member and former U.S. representative Barney Frank made several statements suggesting that the bank’s closure was crypto-related. Frank alleged in a CNBC interview that Signature Bank was closed to “send a strong anti-crypto message.”

However, statements from the regulator responsible for Signature’s closure clearly refute the notion that willingness to work with crypto clients was an issue.

Signature fallout continues

The NYDFS initially closed Signature on Monday, March 13.

At the time of the bank’s closure, the FDIC took control of all deposits in order to provide customers with access to insured deposits. Later, the Treasury and other agencies announced a Biden administration-led emergency plan that will return all funds ⁠— not just insured funds ⁠— to users. This plan also applies to Silicon Valley Bank customers.

The closure will likely force several firms to find a new banking provider. Coinbase was among the crypto companies known to store funds with the bank, and about 30% of Signature’s deposits were estimated to come from crypto firms.

The closure of Signature Bank follows the collapse of Silicon Valley Bank on March 10 and Silvergate Bank’s decision to halt all operations on March 8.

Edit: An earlier version of this piece claimed that Circle stored funds with Signature Bank. While Circle chose to use Signature for its reserve deposits in 2021, it had no funds with the bank at the time of its closure.

Bankruptcy

FTX EU opens European withdrawals website

Published

18 hours ago

March 31, 2023

Mike Dalton

FTX EU opens European withdrawals website Mike Dalton · 29 mins ago · 2 min read

The site will solely provide fiat withdrawals and no other services.

2 min read

Updated: March 31, 2023 at 1:57 am

Cover art/illustration via CryptoSlate

FTX EU has opened a website to allow former European customers to submit withdrawal requests, according to a report from Finance Magnates on March 30.

Site is for withdrawals; license remains suspended

Quoted statements from FTX EU indicate that the site, located at ftxeurope.eu, will solely handle fiat balance claims and that no other services will be offered.

Finance Magnates noted that the newly-launched website is registered with the Cyprus Securities and Exchange Commission (also known as CySEC). It additionally noted that FTX EU has regional headquarters in Cyprus alongside its headquarters in Switzerland.

CySEC reportedly suspended the company’s operating license in November 2022 following the broader collapse of FTX and Alameda Research that same month. That suspension was carried out due to violations of market laws concerning the composition of the FTX EU board and in order to preserve the safety of client assets, among other reasons.

CySec extended the suspension to March 2023 in order to give FTX EU additional time to comply with provisions and return funds belonging to clients.

FTX EU’s license is still under suspension, according to Finance Magnates.

Other FTX funds will be returned differently

FTX’s main branch, which served U.S. customers will return funds through an ongoing bankruptcy process. There, it owes more than $3 billion to its 50 largest creditors and $5 billion to nine million customers. It is unclear when customers may see those funds.

However, some global branches are not part of this bankruptcy process. Another international branch, FTX Japan, opened its own withdrawal process through Liquid Japan starting on February 21, 2023. Subsequent reports suggest that some users had difficulties withdrawing their funds as the company denied their withdrawals.

FTX EU opened in March 2022 just months before FTX’s collapse, while FTX Japan opened even later in June 2022. Though comprehensive user counts are not available, each division likely had few customers compared to FTX’s main branch.

The Bahamas-based FTX DM, meanwhile, is being liquidated.

Posted In: FTX, Bankruptcy

Recent FTX Stories

ACCESS

Former FTX CEO Seeks $10M Insurance Fund For Legal Defense, Request Opposed By FTX Debtors And Unsecured Creditors

Published

23 hours ago

March 30, 2023

Jamie Redman

Former FTX CEO Seeks $10M Insurance Fund For Legal Defense, Request Opposed By FTX Debtors And Unsecured Creditors

Court filings reveal that the FTX co-founder is seeking access to a $10 million insurance plan to cover his attorney fees. FTX debtors and unsecured creditors have opposed Sam Bankman-Fried’s request, arguing that every dollar spent on his defense is “one less dollar” available to cover the losses of the debtors.

FTX Debtors and Unsecured Creditors Oppose Sam Bankman-Fried’s Request for D&O Funds

Sam Bankman-Fried (SBF), the former CEO of FTX, is seeking access to a $10 million legal insurance fund to cover his defense expenses. The filing notes that FTX’s $10 million director and officer (D&O) insurance policy covers individuals who are “legally obligated to pay on account of any claim first made against them.” However, FTX debtors and the committee of unsecured creditors have criticized SBF’s request, arguing that granting him access to the insurance funds would harm the debtors and cause “material prejudice.”

“Thus, for every dollar extended by the insurance carrier to Mr. Bankman-Fried’s defense costs, there is one less dollar to pay the WRS Debtors’ covered Losses,” the debtors declare.

The debtors emphasize that the insurance policy excludes claims arising from “violations of securities laws, violations of money laundering laws, and any willful or fraudulent acts or omissions.” The lawyers explain that the D&O policy belongs to the debtors’ estates, and therefore, the court should not grant Sam Bankman-Fried unrestricted access to it.

Instead, the debtors believe that the court should require SBF to adhere to the bankruptcy court’s 2016 compensation rules. Although SBF argues that depleting the D&O policy would not harm the debtors’ estate, the debtors and unsecured creditors strongly disagree, stating that this assertion is “flat wrong.”

The court filing adds:

Mr. Bankman-Fried is also wrong in claiming that coverage for the debtors’ estate is ‘hypothetical or speculative’ and that the debtors ‘have no present contractual interest in the proceeds of the D&O policies.’ As noted above, the debtors have retained pool counsel to represent certain current or former employees of the debtors, whose fees are an insurable expense.

The recent objections to SBF’s request for D&O funds are a result of the allegations that he has been using Alameda funds to cover his legal defense expenses. According to sources cited by Forbes, SBF is purportedly using a gift of $10 million he gave to his father in 2021 to pay for his white-collar legal team.

Tags in this story

ACCESS, acts, alameda, Allegations, Bankruptcy, carrier, ceo, claims, compensation, counsel, Court, coverage, creditors, D&O, debtors, Defense, Employees, estate, exclusions, expenses, father, filing, flat wrong, Forbes, Former, fraudulent, ftx, FTX co-founder, fund, GIFT, Insurance, Laundering, Lawyers, legal, material, money, objections, omissions, policy, prejudice, rules, Sam Bankman-Fried, sbf, Securities, unsecured, white-collar

Do you think Sam Bankman-Fried should be granted access to the $10 million legal insurance fund for his defense expenses, or should the court require him to comply with the bankruptcy court’s 2016 compensation rules? Share your thoughts in the comments below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Bankruptcy

Paxful to refund users’ Earn balances affected by Celsius collapse

Published

2 days ago

March 29, 2023

Mike Dalton

Paxful to refund users’ Earn balances affected by Celsius collapse Mike Dalton · 1 hour ago · 1 min read

Paxful CEO Ray Youssef said funds will be returned by the end of the week.

1 min read

Updated: March 29, 2023 at 10:11 pm

Cover art/illustration via CryptoSlate

Peer-to-peer crypto exchange Paxful will refund user balances affected by last year’s collapse of Celsius, according to a statement on March 29.

Until recently, Paxful offered an interest-bearing product called Paxful Earn, which it offered in cooperation with the crypto lending company Celsius. However, Celsius collapsed in June 2022, depriving Paxful of the funds it stored with Celsius Earn. Paxful, in turn, prevented customers from withdrawing funds from its own Paxful Earn platform.

Now, Paxful founder and CEO Ray Youssef has stated that users who held funds in Paxful Earn will receive a refund for the balances in those accounts.

Youssef commented on the fact that court proceedings have determined that Celsius Earn balances belong to the bankruptcy estate. He stated that this decision “still doesn’t sit right with me today” and said that individuals depend upon their investments.

The CEO said that the company has “dug into [its] own pockets” to provide the refund.

Youssef did not provide a precise date by which users can expect a refund but said that users can expect funds to appear in their wallet by the end of the week.