After a period of uncertainty, Circle, issuer of the USDC stablecoin, has recognized a large exposure of its funds within the bankrupt Silicon Valley Bank. It is thus a total of 3.3 billion dollars of its cash intended to support the heart of the USDC which is impacted by a financial event whose consequences are for the moment impossible to assess.
Circle’s significant exposure in the Silicon Valley Bank bankruptcy
The news fell in the night and showered the hopes of those who thought that the exposure (and the damage) would be a little more limited. Circle has made known the reality of the amounts held by Silicon Valley Bank, which has recently been declared bankrupt. And these are substantial.
“1/ Following confirmation at the end of the day that transfers initiated on Thursday to withdraw balances have not yet been processed, $3.3 billion of the $40 billion in USDC reserves remain at SVB. »
$3.3 billion is nearly 8% of the entire USDC capitalization. A very substantial amount, even for a crypto giant like Coinbase.
In the aftermath, the exchange did know that the platform suspended USDC>USD conversions, in order to avoid a disastrous effect of serial liquidations and a potential bank run phenomenon. Exchanges on chain remain possible, however, although it should be noted that the USDC is experiencing a significant depeg in its value at the time of writing (with a low point of $0.91 reached around 4am French time).
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