USDC Drops 12% on Silicon Valley Bank Exposure
USDC has lost its dollar peg after it emerged that USDC issuer Circle had parked $3.3 billion of USDC with Silicon Valley Bank.
USDC has lost its dollar peg after it emerged that USDC issuer Circle had parked $3.3 billion of USDC with Silicon Valley Bank. The coin briefly traded just under $0.90, but has since rebounded to above 90 cents.
The End of Silicon Valley Bank
Recently it was revealed that the 'crypto bank' is being closed by U.S. regulators. The reason is a loss of trust in the bank. As a result, many clients pulled their capital, pushing the bank further into trouble. The crypto sector is taking a hit because the bank provides crypto services.
Circle Unable to Withdraw USDC from the Bank
Circle said on Twitter that they attempted to move the $3.3 billion of USDC out of Silicon Valley Bank, but were unable to do so, meaning USDC is now stranded at the bank. What will happen to the funds remains unclear. In response to the news, many investors sold their USDC, fearing a Terra Luna-like scenario. It’s currently uncertain whether USDC will recover or whether a Terra Luna-style wipeout is looming.
