Almost immediately after USD Coin (USDC) issuer Circle revealed that it was unable to withdraw $3.3bn of its $40bn from Silicon Valley Bank (SVB), the resulting selloff sent the stablecoin's price falling below your $1 mark.
On March 9, Circle had initiated a wire transfer to withdraw its funds from SVB as insured by the Federal Deposit Insurance Corporation. bank was about to close operations. However, two days later, on March 11, Circle confirmed that the wire transfers had not been fully processed and that $3.3bn of USDC reserves were still in SVB.
2/ Like other customers and depositors who have relied on SVB for banking services, Circle joins calls for the continuity of this major bank in the US economy and will follow the guidance provided by state regulators and feds.
โ Circle (@circle) March 11, 2023
Data of Cointelegraph Pro Markets and TradingView show that USDC prices fell immediately after the disclosure, as shown below.
At the time of writing, the USDC lost 3% of its value as it was trading at $0.969. According to Dante Disparte, Circle's director of strategy and head of global policy, SVB is critical to the US economy, warning that "its failure, without a federal bailout, will have broader implications for business, banking and businessmen," he added. :
โAs with Silvergate, our teams have worked at full speed to limit any exposure to banks. This includes a wire transfer request made prior to the FDIC receivership of SVB. There remains a cash exposure of $3.3 billion, but we are following state and federal regulatory guidance."
On-chain data more reveals that Circle redeemed a net $1.4 billion worth of USDC in the span of 8 hours. In an effort to reduce exposure, crypto firms including Coinbase and Jump Trading have redeemed approximately $850 million and up to $138 million in USDC.
Related: Breaking: Circle reveals $3.3 billion tied up in Silicon Valley Bank
Just two weeks ago, on February 23, USDC issuer Circle announced plans to increase its headcount by 25%, going against the current layoff trend.
During the timeline, Circle's CFO Jeremy Fox-Geen had shared his intention to go public, but planned to wait for better market conditions. He added that the crypto industry needs more distance from the Terra and FTX implosions for public market investors to reassess the future of digital asset business.
Post navigation
