Stablecoin issuer Tether reportedly used Signature Bank’s payments platform as a pathway to access the U.S. banking system.
According to an April 4 report from Bloomberg, citing people with knowledge of the situation, Tether instructed its crypto clients to pay for its USDT stablecoins by sending U.S. dollars to Bahamas-based Capital Union Bank through Signature’s Signet payments platform.
Tether CTO Paolo Ardoino tweeted in response to Bloomberg’s article, reiterating that the stablecoin issuer did not have any exposure to Signature.
As I stated on 12th of March 2023, Tether didn't have any direct or indirect exposure to Signature.
Good risk management where everyone failed…
— Paolo Ardoino 🍐 (@paoloardoino) April 4, 2023
Signet was Signature Bank’s 24/7 instant payments network for digital assets. Although the network’s future looked uncertain following Signature’s closure last month, a spokesperson for crypto exchange Coinbase confirmed that it was still functional, in a statement to CoinDesk shortly after.
“As of Tuesday, Signet continues to function and all past and future customer deposits continue to be FDIC-insured,” said the Coinbase spokesperson at the time.
The network’s continued operations appear to have been made possible through Signature Bridge Bank – an interim entity set up by the Federal Deposit Insurance Corporation (FDIC).
A source affiliated with Signature Bridge Bank told CoinDesk that Jeremy Allaire, CEO of USDC issuer Circle, had tweeted regarding the firm halting redemptions through Signet the night before Signature Bridge Bank issued a press release announcing it was open for business.
Many in the crypto community have questioned the abrupt closure of Signature by regulators. In a recent episode of Unchained, Jim Bianco, founder of Bianco Research, explained why he thinks the bank’s takeover by New York regulators is “a little fishy.”