- Circle verified that $3.3 billion of the USDC reserves was lying with SVB.
- As of this writing, the USDC was trading at $0.8974.
The price of USD Coin (USDC) dropped below the $1 mark almost instantly after its issuer, Circle, said that it has been unable to withdraw $3.3 billion of its $40 billion from Silicon Valley Bank (SVB).
When SVB, a bank insured by the Federal Deposit Insurance Corporation, announced on March 9 that it would be closing, Circle took the initiative to move its money elsewhere. Nevertheless, on March 11, Circle verified that $3.3 billion of the USDC reserves was lying with SVB and that the wire transactions had not been fully executed.
Yet Another Blow
According to CMC, USDC prices dropped sharply when the news broke. As of this writing, the USDC was trading at $0.8974, a drop of nearly 11%. Circle’s chief strategy officer and head of global policy, Dante Disparte, said that SVB is essential to the US economy and that its collapse will have far-reaching effects on business, banking, and entrepreneurs without a Federal rescue plan.
On-chain information also shows that in only 8 hours, Circle redeemed a net of $1.4 billion in USDC. Around $850 million and up to $138 million in USDC were redeemed by cryptocurrency exchanges including Coinbase and Jump Trading in an attempt to lower risk.
Circle, a USDC issuer, bucked the current trend of layoffs only two weeks earlier, on February 23rd, when it announced intentions to raise its personnel headcount by 25%.
Chief financial officer Jeremy Fox-Geen announced Circle’s intention to go public during the time period but said they would wait for more favorable market circumstances. His second point was that public market investors need more time to reevaluate the future of digital asset enterprises before they can return to the crypto market.