On July 1, regulators on the island halted the bank’s activities, with its capital supposedly negative $1.3 million by the end of the year 2020 and that “as such, the entity is classified as insolvent.” Schiff took to Twitter on July 4 to elaborate in a thread on the matter of why “despite no evidence of crimes”, regulators in the country, instead of allowing a sale to a highly qualified buyer who had promised to infuse capital well in excess of regulatory minimums, went ahead and closed the bank.
Schiff’s ‘bad press’ apparently behind the sale being blocked
According to Schiff, the authorities described the rationale for turning down the sale as the fact that after the sale, he would control 4% of the firm that would be purchasing the bank. “They said that due to the bad press about me, they did not want me owning 4% of a bank, even though they know first-hand the allegations in the media are false.” The economist indicated that the regulators never made him aware that they opposed it and that he only found out about the closure via a stop and desist order to shut down the bank; he underlined that “had they ever told the 4% stake was a problem I would have restructured the deal.” Schiff also stressed that “it costs a fortune to run a small bank. That’s why I never really made any money. The compliance costs are outrageous.”
Crypto community reacts
Given that Schiff is well-known in the cryptocurrency space as an ‘anti-Bitcoiner’, some took it as a chance to show the digital asset’st strength for financial freedom. In a statement, he claimed, “Our compliance is so rigorous, and we close accounts so quickly” and that he never accepted customers linked to cryptocurrencies, cannabis, or other sectors. Alex McShane wrote: Consequently, the abrupt closing of Schiff’s bank in Puerto Rico sparked a new wave of conversation over the resilience of Bitcoin in the face of judicial authority. Nevertheless, many in the cryptocurrency community empathise with Schiff and the bank’s clients, who have lost money as a result. Ultimately, the incident will further solidify Bitcoin’s position as the eventual substitute for traditional banking and finance among its most ardent supporters.
