The pro-crypto bank was reportedly under dual investigations to uncover if it was taking proactive measures to stop money laundering.
Two United States government agencies reportedly investigated Signature Bank‘s cryptocurrency offering before it collapsed.
According to a March 15 Bloomberg report citing people familiar with the matter, investigators at the Department of Justice are investigating whether Signature has taken adequate steps to identify its clients who may have siphoned off money. It was found that the controller is particularly concerned about whether the bank is taking measures to monitor transactions for “signs of crime” and to monitor the account holders properly.
A separate investigation by the Securities and Exchange Commission has also investigated the bank, according to two unnamed sources cited by Bloomberg. Details on the nature of the SEC’s investigation were not disclosed.
It’s unclear when the investigation began and what impact, if any, they had on New York state regulators’ recent decision to close the bank. It is reported that the signature and its employees are not accused of any wrongdoing and the investigation may be completed without any charges or other action by the SEC or the Department of Justice (DOJ).
The news follows a March 14 class-action lawsuit filed by shareholders against the bank and its former executives for allegedly having “hard cash,” just three days before it was forced to close. Former Signature Bank CEO Barney Frank said on March 13 that regulators want to “send a strong anti-privacy message.”
Frank added that crypto-friendly banking has become the “poster boy” because there is no “nonsense.”
The signing, which closed on March 12, was part of a series of bank closings that also included Silvergate Capital and Silicon Valley Bank (SVB).
The DOJ and SEC have opened separate investigations into the failure of Silvergate Capital and SVB. It was reported that regulators will look into the factors that led to the bank’s collapse, including a review of securities documents that showed the sale of SVB by CEO Greg Becker and CFO Daniel Beck two weeks before its collapse.
The SEC has not commented publicly on these issues, but SEC Chairman Gary Gensler said on March 12 that he would “investigate and take enforcement action if we find violations of federal securities laws.”
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