Coinbase lost $240M in Signature Bank closure Coinbase lost $240M in Signature Bank closure
Paxos and Celsius also lost money in the shut down, however, the companies expect the recover the lost funds soon with the help of the FDIC.
2 min read
Updated: Mar. 13, 2023 at 2:14 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Leading crypto exchange Coinbase disclosed it lost around $240 million in Signature Bank shut-down on Mar. 12.
Paxos and Celsius also announced they lost money in the Sunday Signature Bank shutdown. Companies may need to rely on the Federal Deposit Insurance Corporation (FDIC) to recover lost funds.
Coinbase
Coinbase disclosed the amount lost on its official Twitter account by tweeting:
“Despite the turbulence we have seen in the traditional banking sector recently, Coinbase continues to operate as usual. At Coinbase all client funds continue to be safe and accessible including USDC conversions which will resume on Monday.”
New-York-based Signature Bank was closed by the FDIC on Sunday, Mar. 12. While announcing the shut down; the FDIC also noted that it would compensate the depositors by stating:
“Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.”
Citing this, Coinbase said it currently facilitates client transactions with multiple banking partners and expects to recover the lost funds fully.
Paxos and Celsius
Paxos and Celsius also announced their losses via their official Twitter accounts around the same time as Coinbase.
Paxos said it held $250 million in Signature Bank, which it expects to be refunded mainly by the FDIC. The company also reminded that all depositors’ funds are fully backed 1:1 with the U.S. dollar and therefore are “redeemable at all times.”
On the other hand, Celsius didn’t reveal much information about the amount it lost in the shutdown. It only acknowledged the situation and assured its users about recovering the loss by citing the FDIC document.
Turmoil in the banking sector
Signature Bank was one of the two giants of the crypto banking sector, the other being Silvergate Bank. During the bear market, Signature Bank tried to distance itself from the crypto space and publicized that they are not “not just a crypto bank.” It later announced restricting limits to crypto transactions.
This move potentially pushed Silvergate toward the other end of the balance. However, the FTX collapse had significantly hit the bank, leading to insolvencies earlier this month. Ultimately, the bank stopped operations and underwent liquidation on Mar. 8. Silvergate’s bankruptcy left Signature as the only remaining option for crypto banking services, which increased Signature’s workload. Reflecting on the recent developments, it is fair to say that the crypto banking sector is experiencing significant turmoil.
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Author 
Zeynep Geylan
Zeynep is an academic who turned to crypto in 2018. Originating in social sciences, she is especially interested in the social impact of blockchain and cryptocurrencies and strongly believes in their transmuting power.
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Paxos
Paxos Trust Company, LLC is a regulated blockchain infrastructure company building transparent and transformative financial solutions.
Silvergate
Silvergate is a Federal Reserve member bank and the leading provider of innovative financial infrastructure solutions and services for the growing digital currency industry, based in La Jolla, California.
Signature Bank
Signature Bank® (NASDAQ: SBNY) is a New York-based full-service commercial bank with private client offices throughout the New York Metropolitan area, Connecticut, North Carolina and California.
Celsius Network
Celsius Network is a bankrupt cryptocurrency lending company that was founded in 2017 and headquartered in Hoboken, New Jersey.