Signature Bank, an institution that was crypto-friendly, collapsed due to mismanagement and “contagion” effects after the failure of Silicon Valley Bank.

Federal Deposit Insurance Corp. stated that Signature Bank relied heavily upon uninsured deposit, did not have strong practices for managing liquidity risks and had poor risk management. The report stated that all of this was made worse by a run on the bank sparked by the failure of other banks. The fact that the bank served the crypto industry has also been cited as an important risk.

The FDIC stated that SBNY “failed to understand the risks associated with its association and reliance on deposits in the crypto industry or its vulnerability to the contagion of the crypto industry turmoil which occurred late 2022 and early 2023.”

Signature Bank has been under FDIC review since March, when the New York Department of Financial Services took over the bank.

NYDFS Superintendent Adrienne Harris, despite industry claims that Signature Bank was closed down for only serving crypto clients, has said repeatedly that the bank had problems with other things.

The FDIC report was released on the same day as the Federal Reserve’s and Government Accountability Office’s reviews of Silicon Valley Bank, and Signature. The Federal Reserve, like the FDIC attributed SVB’s collapse to serial management mismanagement, made worse by unaccounted for risks. In SVB’s case, these risks were interest rate hikes and liquid issues.

The GAO stated that Signature “reduced their exposure to deposits” in the crypto industry during the twelve months preceding its collapse.

Signature Bank and Silicon Valley Bank were both affected by the rising interest rate environment, while Silicon Valley Bank had exposure to digital assets. GAO said that banks did not manage their deposit risks adequately.

The three reports all pointed out that the federal regulators were not taking action to manage banks or their risks. They could have requested more information sooner.

Read more: Sen. Warren and Rep. AOC ask Circle, BlockFi why they banked with SVB

Sandali Handagama is the editor.