A former Signature Bank executive has come under fire for seemingly trying to pin the blame for his bank's collapse on cryptocurrencies, while allegedly receiving millions in bonuses and stock options.
During a Senate Banking Committee hearing on May 16, US Senator Cynthia Lummis slammed the now-defunct bank's former chairman, Scott Shay, for A prepared statement of the causes of its bank failure. In his testimony, Shay noted that the bank began accepting de posits from businesses in the digital asset space in 2018, then “significantly” reduced its digital asset deposits in 2022 as the industry experienced turmoil.
His bank was seized by regulators following the collapse of “a bank with strong ties to the digital asset industry,” which led to the withdrawal of $16 billion from Signature, he said. “It looks like there's a lot of blame being shifted onto those particular depositors and regulators who are dealing in digital assets, but you're not accepting any blame yourself," Lummis said.
However, Shay denied pointing fingers at digital assets during the Senate hearing. "You used that word 10 times in your testimony," Lummis replied. In another part of the hearing, Senator Elizabeth Warren slammed Silicon Valley Bank CEO Gregory Pecker and Signature Bank 's Shay for allegedly "keeping millions of dollars after recklessly destroying the bank." "Right now, the law says that people like Mr. Becker and Mr. Shay [...] can pay themselves tens of millions of dollars in bonuses and stock options, and when the bank fails, Mr. Becker and Shay get to keep all the money. That's Totally wrong."
"If we don't fix this, every CEO of these multi-billion dollar banks will continue to take risks and blow up the bank, and everyone else will have to pay the price." Warren noted that she is working within a bipartisan group on the Banking Committee to introduce a bill that would bring back "these crazy paychecks." In April, New York Department of Financial Services (NYDFS) Director Adrienne Harris reportedly said that blaming cryptocurrencies for the collapse of Signature Banks was "ridiculous."
Speaking at the Chainalysis Links conference in New York City, she said the events that led to Signature's failure were “a new kind of bank run.” NYDFS took over Signature Bank on March 12, claiming it was protecting the US economy from "systemic risk .” The bank is the latest failure following the collapse of crypto-friendly Silvergate Bank and SVB.
