According to an April 5 Bloomberg report, Tether used Signature Bank to gain access to the U.S. banking system.
Tether reportedly instructed crypto clients to pay for its stablecoins (USDT) by sending dollars to its Bahamas-based banking partner Capital Union Bank. According to Bloomberg, Tether used Signature’s Signet payments platform to make these transactions.
Citing anonymous sources, the report claimed that the system was in place when Signature Bank was seized.
Tether Ties or More FUD?
U.S. federal regulators closed Signature Bank in mid-March. They cited concerns about the systemic risks posed by the crypto-focused bank.
The bank began reopening branches in late March. However, the Federal Deposit Insurance Corp (FDIC) ordered customers holding crypto at the bank to close their accounts by April 5.
Nevertheless, Bloomberg journalist Max Abelson said that the collapse of the bank was not directly due to its foray into crypto.
Former SEC enforcement officer Alma Angotti said the bank knew about the Tether arrangement, adding:
“They may well have known and decided this is less risky than opening up an account for Tether directly.”
Tether responded with a statement declaring that the company’s risk management enabled it to “identify particular risks and weaknesses that others had missed, ensuring our entities wouldn’t be affected by either direct or indirect exposure to Signature.”
Tether’s chief technology officer, Paolo Ardoino, also stated that the firm didn’t have any exposure to Signature Bank at the time of closure.
The shuttering of Signature and fellow crypto-bank Silvergate has been part of America’s war on crypto. Investors were hurt because it hindered them from transferring to and from fiat currencies.
Furthermore, the Justice Department investigated Signature for crypto involvement before its seizure. There was no evidence of wrongdoing at the bank or by its staff.
Therefore, it is safe to conclude that Tether played no role in the collapse of Signature Bank.
Signature Bank Stock Sale
In a related development, the Wall Street Journal reported that Signature Bank insiders sold $100 million in stock. This occurred during the crypto boom in 2021.
On April 4, the outlet, which is traditionally anti-crypto, stated that company stock surged 140% in 2021.
“The insider transactions at Signature weren’t widely known because of where they were filed and how the transactions were described in the documents.”
Finally, crypto markets are fighting back against the river of FUD with a 3% gain in market cap on the day.
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