Signature Financial institution confronted legal probe forward of its collapse – Bloomberg Information

(Reuters) -U.S. prosecutors have been investigating Signature Financial institution (NASDAQ:)’s affiliation with crypto shoppers earlier than regulators immediately seized the lender final weekend, Bloomberg Information reported on Tuesday, citing folks conversant in the matter.

U.S. Justice Division investigators in Washington and Manhattan have been inspecting whether or not the now-collapsed financial institution took mandatory steps to detect potential cash laundering by its shoppers, in accordance the report, including that the Securities and Trade Fee (SEC) was additionally scrutinizing the financial institution.

The report comes after New York’s monetary regulator earlier within the day mentioned its choice to shut Signature Financial institution had “nothing to do with crypto”, however was spurred by what it known as “a big disaster of confidence within the financial institution’s management” after the collapse of Silicon Valley Financial institution.

The U.S. Federal Deposit Insurance coverage Company (FDIC), which has taken management of the lender, declined to touch upon the report.

FDIC-operated Signature Bridge Financial institution, which was created after state regulators closed Signature Financial institution, additionally declined to remark.

The SEC and Justice Division did not instantly reply to Reuters’ request for feedback.

State regulators closed New York-based Signature Financial institution on Sunday, the third largest failure within the U.S. banking historical past, and two days after authorities shuttered Silicon Valley Financial institution (SVB) in a collapse that stranded billions in deposits.

As of September final 12 months, nearly 1 / 4 of Signature Financial institution’s deposits got here from the cryptocurrency sector, however the financial institution introduced in December final 12 months that it might shrink its crypto-related deposits by $8 billion.