The Signature Bank Signet client list exposed - PART 1
The Signature Bank Signet client list exposed - PART 1
Let's take a closer look at Signet's colorful customer roster.
Dirty Bubble Media (https://twitter.com/MikeBurgersburg) recently published a list of Signature Bank’s ($SBNY) Signet client list.
It is pretty obvious that a lot of the names seem shady at first glance. So we dug deep and looked up the names one by one. It is noteworthy that some of them had no information available at all. Since Signet is designed as a payment system where proper KYC is mandatory, this finding is disturbing: It is a basic principle of KYC to look up the public presence of potential customers - in addition to checking documentation. This research will show that even the most basic principles of KYC were obviously ignored when onboarding the customers to Signet.
Let's take a closer look at some of the fancy names. We will spare you the ones that are obvious and already famous:
Binance
FTX and Alameda
Genesis
It is important to note that not all of the clients on Signet's client list appear to be shady. The majority of them seem to be running a "real" crypto business. There were virtually no customers from other industries on the list - contrary to the statements of Signature Bank's management that Signet is intended to be a cross-industry payment system.
Let’s get going.
ACCE Australia PTY Ltd.
A crypto miner that filed for bankruptcy in September 2022. They are also being sued for not doing enough to prevent scammers from using their platform to defraud users.
https://duxtonhill.com.au/missing-devices-in-crypto-scam-case-thrown-away-under-company-policy/
Amalga Securities Ltd.
A Seychelles-based wealth and asset management firm. Described as "Amalga Securities is a boutique firm that offers a one stop shop for international clients’ needs from fiduciary to financial services and more". There is no obvious reference to the crypto business - and questions should be asked as to why a Seychelles-based wealth management firm needs to be banked by a local bank in the United States.
There also appear to be close ties to Africa: Director Matthew Norris (an Australian army veteran) is also a director of a "Lombard Africa Fund Limited" - a completely opaque fund vehicle.
Bithump
An active South Korean crypto exchange. Its former chairman Lee Jung-Hoon is currently facing an eight-year prison sentence for a $100 million fraud case.
Blockchain Access UK
The former UK subsidiary of Blockchain.com, which was often used by scammers for crypto scams and frauds. Recently, Blockchain.com has moved the UK customers' contracts to its Lithuanian entity. While the customer accounts may have been transferred, the entity is still being used for scams. The FCA has issued a warning:
The company's accounts have been past due since 2021 while they are still listed as a Signet customer.
BlockFi Lending LLC
A bankrupt crypto lender that filed for bankruptcy on November 28, 2022. Prior to its collapse, it was fined $100 million by the SEC for its unregistered lending product - effectively operating illegally.
Broad Gold Group
Nothing to find about them - zero - nada. They did not even appear to have existed in the past. Opening a payment account for a company that returns zero search results is not only highly suspicious, but it really raises serious questions about the KYC practices applied.
BTG Trading Ltd
Incorporated in Malta, there is not much to be found about BTG Trading Ltd. - except, of course, the few things that can be found set off all the alarm bells:
The company data comes from the Paradise Papers leak. The managing director is one Vadim Romanov, a Russian citizen living in Moscow. He's a shareholder in two other companies - BTG Trading Ltd. and BTG Business Ltd. - both also incorporated in Malta.
Searching for the name Vadim Romanov returns results for both a male porn star and a soccer coach. One has to wonder if this name is even real.
It is highly doubtful that such people and companies would be allowed to bank in any Western country. Why does Signature Bank provide bank accounts (or rather "pro forma" bank accounts through Signet) to such clients?
Cezex Trading Ltd.
A company incorporated in Singapore with no public presence. Company registries return the following description:
Cezex appears to be based in the Philippines. However, the website https://cezex.io is no longer active and redirects to a crypto casino. Founded in 2019, activity appears to have ceased, but Cezex still appears to hold accounts at Signature Bank.
Coinsuper
An obvious exchange scam: The Hong Kong-based company was founded in 2017, but appears to be offline.
The corresponding coin, CEN, also seems to have stopped trading.
The forums are full of complaints about users being scammed out of their deposits:
https://bitcointalk.org/index.php?topic=3510855.0
https://www.reddit.com/r/scambait/comments/8grbut/coinsuper_exchange_scam/
All of these complaints are several years old. However, this company appears to still be a customer of Signature Bank.
Covario AG
A Swiss-based crypto broker that went bust in late 2022, losing millions for investors (https://cvj.ch/en/hot-topics/news/zug-based-crypto-prime-broker-covario-files-for-bankruptcy/).
Covario AG doesn't look fraudulent, but it's a good example of the potential risk on Signature Bank's balance sheet.
Crypto London Exchange Ltd
A fake company used by fraudsters. The FCA issued a warning about it in 2021 (https://www.fca.org.uk/news/warnings/crylonltd-crypto-london-exchange-ltd-clone-fca-authorised-firm). Crypto London Exchange Ltd. uses the shell to clone an FCA authorized company.
This is a clear example of Signature Bank's (potentially unintentional) support of fraudsters and their failure to do even the most basic research on the companies they are onboarding.
Drawbridge Lending LLC
Drawbridge Lending LLC was already acquired by Galaxy Digital in 2020 - yet it is still listed as a customer of Signature Bank in 2021. Drawbridge appears to have dissolved into the Galaxy ecosystem.
This raises the question of whether Signature Bank even has basic active account management to keep customer relationships current.
GloBee International AG
Another Swiss crypto exchange currently in liquidation: https://business-monitor.ch/en/companies/954809-globee-international-ag-in-liquidation. Twitter silence since Sep, 2022.
Greenline Enterprises LTD
Virtually nothing can be found on this company. That is, there is a reference to Greenline Enterprises in a 2019 report of Bindura Nickel Corporation in Zimbabwe.
It remains unclear why Signature Bank would want to bank this company. Providing banking services to clients who do business with African mining companies does not really seem to be the core business of Signature Bank.
GSR
A crypto market maker that is about to die in the fallout of FTX
But that doesn't seem to be stopping GSR CEO Jakob Palmstierna. He sees Alameda's demise as an "opportunity" for the market.
We will see what the future holds for GSR and what it means for Signature Bank's balance sheet. In the meantime, GSR continues to do business and fight its conflict with the FCA like so many others:
Summary
In Part 1, we examined the first batch of Signature Bank's Signet customer list. As it turns out:
Questions need to be asked about the application of basic KYC principles to the onboarding of crypto clients.
n a few cases, it is absolutely clear that Signature Bank was banking fraudsters (FTX, Crypto London Exchange).
Besides the KYC risks, there seems to be massive economic risks for Signature Bank by banking risky customers who are on the verge of insolvency or are already insolvent.
Last but not least: During the Q4/22 update call, Signature Bank's Eric Howell disclosed 1,410 active digital deposit customers. It is therefore very likely that the customer list is significantly inflated since November 2021.
Disclaimer: We are short SBNY
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