Signature Bank Failed to Acknowledge ‘Volatility’ of Crypto Exposure, According to Lawsuit

Former investors in Signature Bank allege that the bank undermined “the health of its balance sheet” by failing to acknowledge its “degree of concentration” in the cryptocurrency sector


Peace-loving/Shutterstock modified by Blockworks


Former executives at Signature Bank face a class action lawsuit from investors who accuse the bank of downplaying its cryptocurrency exposure.

Signature Bank collapsed on March 12, when federal regulators stepped in and closed the bank. Days earlier, the same steps were taken to shutter fellow crypto-friendly institution Silicon Valley Bank. 

In a new class-action lawsuit, investors alleged that the former executives were at fault for failing to accurately represent the bank’s exposure to the cryptocurrency space. 

“Notwithstanding the volatility of cryptocurrency, Signature Bank consistently assured investors of the soundness of its crypto-related deposits and downplayed any risks associated with its lopsided exposure to the cryptocurrency industry, claiming that the Bank was carefully managing its balance sheet and bolstering its compliance department.”

The suit’s claims go back to 2020, but former CEO Joseph DePaolo said in the third quarter 2022 earnings call that the crypto sector “…seems like it’s somewhat stabilizing. They’ve been in this winter crypto for over a year now. And sooner or later, it’s time to get out. And we’re probably seeing positive things going on for us. So that when it does dissipate, we’ll have — we’ll be ready, just like with all our other businesses.”

Following the collapse of FTC last fall, Signature said that its digital asset deposits “remained stable.” 

The suit seeks damages for investors who bought in April 2020 and March 2023. 

Last month, regulators made depositors in both Signature and Silicon Valley Bank whole, but no protections were given to investors in either bank.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. What you can expect: And more! Don’t miss out on the opportunity to be in the room when the future of crypto is decided. Join us and help shape the future of our […]

recent research

Research report - cover graphics-2.jpg


Base has doubled-down on its commitment to the Superchain vision, has shown early signs of success with nearly $400M in TVL, and has become home to novel dapps such as which has seen significant traction.


The bitcoin halving slated for April 2024 — an event expected to spur upward price action for BTC — could be a boon for Block’s stock price, analysts say


Seed Club founder Jess Sloss is excited to “open the doors and let other people see what we’ve been seeing for the last few months”


Blockchain is a “natural fit” in games based on open economies and user-generated content, says Wyatt


Their current stance is a half-baked attempt that could stifle innovation and burden an emerging industry


Maker’s DeFi-focused “subDAO” passed a proposal activating a lending market for DAI on the Gnosis Chain


Certain creditors could be repaid sooner, with one hedge fund exec telling Blockworks it expects a payout by the end of the year