Barney Frank – a board member for Signature Bank and former member of U.S. Congress – believes the government had “no objective reason” to force his company into receivership on Friday.

Rather, he interpreted the action as an attempt by regulators to “send a very strong anti-crypto message,” throughout the country. 

Why Close Down Signature?

In a phone interview with CNBC, Frank said that Signature Bank’s customers withdrew $10 billion from the firm in a bank-run style panic after Silicon Valley Bank (SVB) was forced to close its doors on Friday. 

Just two days later, the FDIC took similar action against Signature Bank, while the Federal Reserve announced that it would entirely bail out depositors for both banks. The firms’ management teams have been swept out, and regulators are currently conducting a sales process for each.

However, according to Frank, no such action was necessary at Signature, where executives believed the deposit exodus has stabilized by Sunday. 

“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Frank said. “We became the poster boy because there was no insolvency based on the fundamentals.” 

The former congressman added that Signature detected no problems “until we got a deposit run late Friday, which was purely contagion from SVB.” 

Frank was a co-author of the “Dodd-Frank Act”, a reform package intended to protect consumers from the predatory lending practices that sparked the 2008 financial crisis. According to the Fed, a full bailout for depositors to both SVB and Signature was necessary to protect the stability of the financial system. 

The context of Signature’s failure cannot be ignored: the firm was the last of the top three U.S. crypto banks – Silvergate, SVB, and Signature Bank – to remain standing. After retreating to Signature after the former revealed operational difficulties in early March, it remains a mystery where firms like Coinbase and LedgerX will retreat to next. 

Operation Chokepoint 2.0

Many in the crypto industry suspect that the slew of regulatory attacks against stablecoins, staking products, and crypto-friendly banks in recent months is a deliberate attempt to squeeze the industry out of the country – a conspiracy nicknamed “Operation Chokepoint 2.0.”

Crypto exchange Kraken – which fell victim to the regulatory hammer last month – used the moniker in response to events surrounding SVB and Signature Bank on Sunday.

“They will continue to attack the rails, products, and companies facilitating direct crypto ownership and DeFi use,” revendiqué the exchange.