FDIC Sold Collpsed Signature Bank to Michigan-Based Flagstar Bank

On March 12th, the New York Department of Financial Services shut down Signature Bank after a bank run that saw customers withdraw deposits of nearly $10 billion within an eventful 24 hours. 

Only a week after the New York Fed appointed the FDIC to oversee a timely sale of its assets, from March 20th, all 40 branches of the defunct bank will now resume activity under the new name “Flagstar Bank.”

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The announcement did not go unnoticed in the cryptocurrency industry as some top exchanges, including Coinbase and Paxos, had confirmed having significant exposure to Signature Bank at the time of the collapse.

While all the deposits continue to be insured up to the $250,000 insurance limit, the FDIC excluded all cryptocurrency-related deposits totaling $4 billion from the acquisition deal with Flagstar Bank. Instead, the FDIC stated it would “provide these deposits directly to customers whose accounts are associated with the digital banking business.”

This announcement came after March 17th reports suggesting that the FDIC would make bidders stop all crypto activities as part of its requirement for the potential Signature Bank acquisition.

The deal was confirmed after the Federal Deposit Insurance Corporation (FDIC) released an official statement on March 19th. According to the announcement, the agreement will now see Flagstar Bank acquire $38.4 billion worth of deposits and liabilities of nearly $12.9 billion in loans.

Although an FDIC spokesperson had previously denied that the agency had included crypto divestment as part of the sale requirements, the official statement now appears to confirm the speculations.