Almost immediately after USD Coin (USDC) issuer Circle revealed it was not able to withdraw $3.3 billion of its $40 billion from Silicon Valley Bank (SVB), the resultant sell-off caused the price of the stablecoin to fall below its $1 mark.
On March 9, Circle had initiated a wire transfer for the removal of its funds from SVB as the Federal Deposit Insurance Corporation-insured bank was about to shut operations.
However, two days later, on March 11, Circle confirmed that the wire transfers were not completely processed and that $3.3 billion of the USDC reserves was still with SVB.
1/ Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.
— Circle (@circle) March 11, 2023
At the time of writing, USDC lost over 10% of its value as it traded at $0.8774.
According to Dante Disparte, the chief strategy officer and head of global policy for Circle, SVB is critical to the US economy and warned that “its failure — without a Federal rescue plan — will have broader implications for business, banking and entrepreneurs.
On-chain data further reveals that Circle redeemed a net of $1.4 billion in USDC in the span of 8 hours. In an effort to reduce exposure, crypto companies including Coinbase and Jump Trading redeemed approximately $850 million and upto $138 million in USDC.