Circle, the company behind the issuance of the USD Coin (USDC) has made an announcement about their latest pledge.
The Circle officials have stated that they will ensure that if anything is to happen to the $3.3 billion funds stuck at the SVB, they will cover them.
$3.3 Billion Shortfall
When the Silicon Valley Bank collapsed and was brought under control by the US Feds, Circle had confirmed being exposed to the bank.
They revealed that they had $3.3 billion worth of funds stuck at the Silicon Valley Bank as it shut down. This led to a great downfall in the trading price of the USDC as it ended up losing its dollar peg.
This had the entire USDC and the crypto industry worried about the future of the USDC. They were terrified to see that the second-largest stablecoin was facing such a downtrend.
Since the demise of the USDC, the Circle officials have provided assurances about the future of the USDC. Despite revealing being exposed to the SVB, they have claimed that they will not let the exposure impact their performance.
They provided assurances that the issue will not persist but they had not provided any clarification or explanation about what they will do to fix the problem.
The assurance worked like a charm and the trading price of the USDC climbed from 87 cents to a high of 95 cents.
With 5 cents to go, Circle has made another major announcement confirming that they will bring the redemption value of USDC to the USD.
They will cover any shortfall that is witnessed with the reserves of the stablecoin. However, they have announced that they are doing whatever they can to recover the $3.3 billion funds stored at the SVB accounts.
How Will the Shortfall be Covered?
The Circle executives have provided more information about their plans of covering the shortfall. According to the executives, they will be working towards the coverage of the shortfall in case they are not able to retrieve the funds.
They will work hard to deal with the situation and get the funds from the SVB. However, if push comes to shove, they will do whatever they can so the funds materialize.
They will tap into the corporate resources to gather the funds they need to cover the $3.3 billion deficit. If needed, they will also go for external capital.
They asked the USDC communities to be rest assured that they would face any problems pertaining to the token’s deficit. They will cover the situation and ensure that the deficit is covered.
8.25% of USDC Reserves were Exposed to SVB
With the announcement, Circle is trying to recover from the damage that was felt due to the revelation that the company had a huge reserve stuck at the SVB.
At the time of writing, the overall market valuation of USC is $40 billion, which equals the total reserves of the stablecoin.
Therefore, having $3.3 billion worth of reserves stuck at the SVB meant that USDC’s value was in 8.25% of the deficit. Although the deficit is still there the company claims that it is going to cover it soon.
Failed Wire Transfer Transactions
Circle has also revealed that they did make an attempt to receive their $3.3 billion worth of funds but it did not happen.
They revealed that they had attempted to execute a wire transfer for $3.3 billion. They had made an attempt to do it on Friday but the wire transfer request was not executed.
According to the officials, the FDIC that has taken over the Silicon Valley Bank may proceed with releasing the funds to their company.
This is because they had initiated the wire transfer request before the SVB had been shut down by the FDIC. If things work out, they won’t have to acquire the funds from corporate resources or external capitalists at all.
SureTradeGroup.com is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site is paid content that is not written or posted by our writers or editors and the opinions expressed do not reflect the opinions of this website. Any disagreement you may have with brands or companies mentioned in articles will need to be taken care of directly with those specific brands and companies. The responsibility of anyone who may click links in our articles and ultimately sign up for that product or service is their own. Forex, Stocks, Cryptocurrencies, NFTs and Dogital Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.