Circle confirms $3.3B with Silicon Valley Bank, dropping USDC

Almost immediately after USD Coin (USDC) issuer Circle disclosed that it was unable to withdraw $3.3 billion of its $40 billion from Silicon Valley Bank (SVB), the ensuing sell-off drove the price of the stablecoin below $1.

 

Circle began a wire transfer on March 9 to remove its money from SVB, a bank insured by the Federal Deposit Insurance Corporation that was poised to cease operations.

Nevertheless, on March 11, two days later, Circle verified that the wire transfers were not fully executed and that $3.3 billion in USDC reserves were still held by SVB.

At the time of writing, the USDC was trading at $0.8774, a loss of nearly 10%.

According to Dante Disparte, chief strategy officer and director of worldwide policy for Circle, SVB is vital to the U.S. economy, and its demise, without a federal rescue plan, would have far-reaching consequences for business, banking, and entrepreneurs.

Disparte also added:

“As with Silvergate, our teams have worked at speed to limit any exposure to banks. This includes a wire transfer request made before SVB’s FDIC receivership. A $3.3 billion cash exposure remains – but we follow state and Federal regulatory guidance.”

Furthermore, on-chain data suggests that Circle redeemed a net of $1.4 billion USDC during eight hours.

In an attempt to decrease their risk, organizations like Coinbase and Jump Trading redeemed between $850 million and $138 million worth of USDC.

Only two weeks ago, on February 23, USDC issuer Circle announced its intentions to raise its workforce by 25%, bucking the current trend of layoffs.

During the time frame, Circle’s chief financial officer, Jeremy Fox-Geen, announced the company’s intention to go public but wanted to wait until market circumstances were more favorable.

He noted that the crypto sector needs more time to recover from the Terra and FTX collapses before public-market investors can reevaluate the future of digital-asset companies.