SNEAK PEEK
- Circle faced a predicament after $3.3B of its deposits were trapped in SVB.
- SVB’s collapse left Circle and other customers in a dilemma.
- Coinbase allegedly provided a $3B credit line to ensure USDC could be converted.
Following the collapse of Silicon Valley Bank (SVB), new details have materialized regarding the topsy-turvy weekend that ensued. Among these revelations is a plan devised by Coinbase to assist Circle after the USDC stablecoin deviated from its dollar peg.
The incident was triggered by the news that $3.3 billion of Circle’s deposits were trapped at the now-defunct bank, leaving Circle searching for a solution. However, Coinbase reportedly came to the rescue, devising a plan to aid the situation and ensuring the stablecoin could be successfully converted into dollars.
According to an insider source, Circle had already initiated the process of wiring out its funds on that fateful Friday, but the bank collapsed before the transfer could be completed. Consequently, the collapse placed Circle in the same dilemma as hundreds of other SVB customers, with deposits only protected up to $250,000 by FDIC insurance.
In response, Coinbase stepped up to provide an instant credit line of approximately $3 billion to Circle. This move ensured that Circle’s USDC could be converted into US dollars come Monday morning.
While it remains unclear how the situation will ultimately impact SVB’s customers, Circle’s ability to secure critical funds from Coinbase represents a significant development in the rapidly evolving digital currency world.
In conclusion, the recent events surrounding the USDC peg closure highlight the resilience and maturity of the crypto industry. Despite not being the cause of the crisis, good actors such as Coinbase were quick to act and provide a backstop for Circle, demonstrating their solvency and commitment to maintaining stability.
