Publicly-traded cryptocurrency exchange Coinbase revealed Monday that it had $240 million stuck in the American-based traditional banking institute Signature Bank. The firm stated that it hopes to recover these funds.
Coinbase to Recover Stuck Funds
On Sunday, Signature Bank, which held $110.36 billion in assets and $88.59 in deposits last year, was shut down by a state chartering regulator.
Following the closure of Signature’s operations, the Department of the Treasury, Federal Reserve, and Federal Deposit Insurance Corporation (FDIC) published a joint press release. The trio stated that all affected depositors who are taxpayers would fully receive their stuck funds starting on March 13.
The Federal Reserve added that it would “make available additional funding to eligible depository institutions” to keep traditional banks solvent.
Based on reassurances from U.S. financial regulators, Coinbase noted that its client funds would become accessible from March 13. The exchange added that it is “facilitating all client cash transactions with other banking partners.”
U.S. Banks Continue to Crumble
Since the 2008 collapse of the U.S. largest banking institute Washington Mutual, the financial condition of U.S. banks has appeared relatively healthy. However, the latest implosion of three large banks in the country says otherwise.
On March 10, California-based bank Silvergate announced the closure of its operations due to a failure to process trades for clients. The bank’s implosion is closely attributed to the debacle of the infamous crypto exchange FTX.
On the same day, Silicon Valley bank was closed by U.S. financial regulators as it could no longer meet its customers’ financial needs. The collapse has affected several crypto projects. For example, the bankrupt crypto lender BlockFi noted shortly after the crash that it had $227 million worth of insured funds.
Stablecoin issuer, Circle, is another firm affected by the crash of Silicon Valley bank. Since a significant portion of its reserves are held in the bank’s custody, the bank’s collapse caused its USDC stablecoin to lose its peg to the U.S. dollar. The firm stated that it has now reclaimed 100% of its reserves stuck in the financial institute.
Brad Garlinghouse, the CEO of Ripple Labs, mentioned on Sunday that his company had undisclosed exposure to the Silicon Valley bank. Despite that, he added that customers’ funds are safe, saying that “Ripple remains in a strong financial position.”
