The implosion of crypto-friendly Silvergate Bank and Signature Bank have highlighted the downside of crypto, raising concerns over the banking infrastructure in place to protect customers and traders from losses from fraud and market volatility. There have been multiple lawsuits brought against Silvergate and the now-defunct crypto exchange FTX, alleging that the bank was complicit in helping the exchange carry out investor fraud. The situation with Signature Bank is somewhat different as that collapse was attributed to a bank run carried out by a broad base of traditional and non-crypto customers. These cases underscore the need for effective regulations and a safe banking infrastructure that can protect crypto traders, customers, and investors while allowing them to benefit from the potential upsides of digital asset trading. Silvergate, which was forced to liquidate its assets and close its operations, was hit with a class-action suit for securities law violations. The NYDFS superintendent Adrienne Harris has clarified that Signature Bank's failure was not attributed to crypto. As digital assets continue to rise in popularity, it is important for the necessary banking and regulatory infrastructure to be put in place to ensure that all types of customers can buy, sell, and trade cryptocurrencies and digital assets in a secure and safe environment.



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