Federal Deposit Insurance Corporation

Signature’s crypto clients told to close their accounts by April 5: Report

Any crypto deposits not transferred to another bank by April 5 will be liquidated and a check mailed to the client’s address.

Signature Bank’s cryptocurrency clients have been reportedly given until April 5 to take their funds out and find another bank, or have their accounts closed by the federal regulator.

According to Bloomberg, a United States Federal Deposit Insurance Corporation spokesperson said on March 28 that the agency was reaching out to depositors from Signature whose deposits were not included in NYCB’s bid, confirming that these deposits belonged to digital asset clients.

Depositors who have their accounts closed will receive a check to their registered address, so anyone with funds held with Signature but unable to transfer them out should at least ensure their registered address is up-to-date.

Cointelegraph has reached out to the FDIC for confirmation but did not hear back by the time of publication.

While New York Community Bancorp (NYCB) bought most of the deposits and loans held by Signature Bank on March 19, the deal with the FDIC did not include “approximately $4 billion of deposits related to the former Signature Bank’s digital banking business.”

Related: Crypto-friendly banks mismanaged traditional risks, FDIC head tells Senate hearing

Also excluded from the deal was Signature’s payments platform Signet, which is powered by blockchain technology to facilitate real-time payments with no transaction fees or limits. The fate of Signet is still currently uncertain.

New York-based Signature was closed by New York regulators on March 12 amid concern that it was experiencing a bank run and posed a “systemic risk” to the U.S. economy.

The FDIC was appointed as the receiver of the bank, meaning it was tasked with administering the funds and property connected to it.

Banks interested in acquiring the assets of Signature were asked to submit bids to the FDIC by March 17, with the agency reportedly only considering bids from those with an existing bank charter.

FDIC to attempt another auction of Silicon Valley Bank: Report

Regulators are planning another auction for Silicon Valley Bank after the previous attempt to find a new owner failed.

Silicon Valley Bank (SVB) could be returning to the auction block with United States regulators taking a second attempt at finding a buyer for the now-collapsed bank. 

According to a March 13 report from The Wall Street Journal, the Federal Deposit Insurance Corporation told Senate Republicans that they now have additional flexibility to sell the bank after regulators declared the SVB collapse a threat to the financial system.

The regulators first attempted an auction of the fallen bank on March 11, only a day after its closure. Bids were only open for a few hours.

However, the weekend auction reportedly saw no bids from major U.S. banks. There was at least one offer made by another institution — but that was declined by the FDIC.

With SVB declared “systemic,” the FDIC has more leeway to offer incentives for bidders to buy the firm, such as loss-sharing agreements, according to the WSJ. However, a timetable has yet to be set for the second auction.

The FDIC is an independent agency of the United States Government created to protect bank depositors from losing their insured deposits when a bank fails; it also helps with the institution’s bankruptcy process, selling off assets and settling debts.

Related: Silicon Valley Bank collapse: Everything that’s happened until now

California’s financial watchdog shut down Silicon Valley Bank on March 10 after announcing a significant sale of assets and stocks to raise $2.25 billion in capital and shore up operations.

Global banking giant HSBC has already come to the rescue of the United Kingdom-based branch of SVB, announcing on March 13 that its subsidiary, HSBC UK Bank, is acquiring Silicon Valley Bank UK for 1 British pound ($1.21).

Bill Ackman warns US gov’t: Fix mistake in ‘48 hours’ or face ‘destruction’

Billionaire Bill Ackman said that SVB’s senior management made a “basic mistake” and should be fired.

Billionaire Bill Ackman has urged the United States government to “guarantee” all deposits held by Silicon Valley Bank (SVB) within the next “48 hours,” or it risks the “destruction” of many financial institutions.

In a March 11 tweet, Bill Ackman, CEO of hedge fund management firm Pershing Square Capital Management, said a “giant sucking sound” will be heard from the ”withdrawal of substantially all uninsured deposits” from all banks, not just the “systemically important banks (SIBs),” should the government fail to “guarantee all” of SVB’s deposits before the “open on Monday.”

Ackman suggested that this would be the result of “the world” realizing what an uninsured deposit is — “an unsecured illiquid claim on a failed bank.”

He warned that these withdrawals would “drain liquidity” from the community, regional and other banks and “begin the destruction” of these crucial institutions if the United States government fails to protect “all depositors.”

Ackman said the only other way to prevent this was in the “unlikely” event that major financial institutions, such as JPMorgan Chase, Citibank or Bank of America, acquire SVB before Monday.

He argued that this could have been “avoided” if the U.S. government had “stepped in on Friday” to guarantee SVB’s deposits, adding that the long-standing bank’s “franchise value” could have been safeguarded and “transferred” to a new owner in return for an “equity injection.”

Ackman suggested that SVB’s senior management “made a basic mistake” and should be fired. He noted:

“They invested short-term deposits in longer-term, fixed-rate assets. Thereafter short-term rates went up and a bank run ensued. Senior management screwed up and they should lose their jobs.”

After conducting a “back-of-the-envelope review” of SVB’s balance sheet, Ackman believes that even “in a liquidation,” depositors “should eventually” get back approximately “98% of their deposits”.

However, he argued that “eventually” is “too long” when you have “payroll to meet next week.”

Ackman tweeted shortly after, reiterating that the Federal Deposit Insurance Corporation (FDIC) should guarantee all SVB bank deposits by Sunday night, along with a proposed plan.

Related: Silicon Valley Bank failure could trigger run on U.S. regional banks

This comes after Bob Elliot, CEO of investment firm Unlimited, said that the Federal Reserve and FDIC decisions regarding the future of SVB may affect regional banks across the United States, putting trillions of dollars at risk of a bank run.

Elliot stated that nearly a third of deposits in the United States are held in small banks, adding that approximately 50% of those deposits are uninsured.