A former Signature Bank executive has been criticized for trying to blame crypto for his bank’s failure, while allegedly pocketing millions in bonuses and stock options.
During a Senate Banking Committee hearing on May 16, US Senator Cynthia Lummis lashed out at now-bankrupt former bank president Scott Shaye over his prepared statement about what caused his bank’s collapse.
In his testimony, Shay said the bank began accepting deposits from companies in the digital asset sector in 2018 and then “significantly” reduced its digital asset deposits in 2022 as the industry experienced volatility.
He added that his bank was seized by regulators under “a bank with strong ties to the digital asset sector,” which later led to the withdrawal of $16 billion from Signature.
“It seems like a lot of the blame has been shifted onto the specialized depositories that trade digital assets and the regulators, but you have accepted no blame,” Lummis said.
However, Shay denied directly targeting the digital asset during the Senate hearing.
“You used the word 10 times during your testimony,” Lummis replied.
“Living Millions”
During another part of the hearing, Senator Elizabeth Warren lashed out at Silicon Valley Bank CEO Gregory Peker and Signature Bank’s Shay for allegedly “recklessly taking millions after failing banks”.
“Right now, the law says that people like Mr. Baker and Mr. Shay […] They can pay themselves hundreds of millions of dollars in bonds and stock options, and when the banks fail, Mr. Baker and Mr. Shay get all the money. And it’s so wrong”.
“If we don’t fix this, all the CEOs of these multibillion-dollar banks will keep increasing risk and blowing up the banks, and everyone else will pay for it.”
Warren noted that he is working within a bipartisan group on the Banking Committee to introduce a bill that could bring back “these crazy payments.”
Cointelegraph reached out to Shay and Baker for comment but did not immediately receive a response.
In April, Adrienne Harris, the superintendent of the New York Department of Financial Services (NYDFS), reportedly said that it was “absurd” to blame cryptocurrencies for the collapse of Signature Bank.
During a Chainalysis Link conference in New York City, he said that the events leading up to Signature’s bankruptcy were instead a “new-age race on the bank”.
The NYDFS seized control of Signature Bank on March 12, claiming that it was protecting the US economy from “systemic risks”. The bank was the latest flop following the collapse of crypto-friendly Silvergate Bank and SVB.
