Silicon Valley Bank Bankrupts, Crypto Company Circle Affected. The company behind the cryptostablecoin USD Coin (USDC), Circle has USD 3.3 billion or the equivalent of IDR 50.9 trillion (assuming an exchange rate of IDR 15,450 per US dollar) USDC reserves at the bankrupt Silicon Valley Bank (SVB).
The company’s announcement comes after Silicon Valley Bank collapsed Friday in the biggest bank failure since the 2008 financial crisis, roiling global markets and leaving billions of dollars for companies and investors alike.
Crypto investors and traders have been on alert this week for signs of contagion in the financial sector and beyond trouble for crypto-focused SVB and Silvergate, which this week revealed plans to cease operations and voluntarily liquidate.
Boston-based Circle said last week it had transferred a small percentage of its USDC reserve deposits held at Silvergate to another banking partner.
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Circle said in a tweet the company and USDC were continuing to operate normally while waiting to see how SVB recipients would affect their depositors.
After the Silicon Valley bank crash several major crypto companies took to Twitter in droves saying they weren’t affected at all.
The chief executive of cryptocurrency exchange Binance said in a tweet Friday there was no repercussions for the company from the collapse of Silicon Valley Bank. Likewise with the CEO of a crypto company, Tether Paolo Ardoino, who said his company was not affected.
Additionally, Stablecoin issuer Paxos and crypto exchange Gemini also tweeted that they have no relationship whatsoever with Silicon Valley banks.
The US financial regulator has closed Silicon Valley Bank (SVB) and taken control of its deposits. This was announced by the Federal Deposit Insurance Corp. on Friday, March 10, 2023.
Silicon Valley Bank Bankrupts, Crypto Company Circle Affected. Quoted from CNBC, Saturday (11/3/2023), the closure of Silicon Valley Bank is the biggest bank failure in the United States (US) since the global financial crisis more than a decade ago. The collapse of SVB, a key player in the tech and venture capital community left wealthy companies and individuals unsure what would happen to their money.
According to a press release from the regulator, the California Department of Financial Protection and Innovation closed the SVB and named the FDIC as a beneficiary. The FDIC in turn has created the Deposit Insurance National Bank of Santa Clara, which now holds Silicon Valley Bank’s insured deposits.
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In the announcement the FDIC said insured depositors will have access to deposits by Monday morning, March 13, 2023. SVB branch offices will also reopen by then, under regulatory control. Based on the press release, SVB checks will continue to be carried out.
Standard FDIC insurance covers up to USD 250,000 per depositor, bank for each category of account ownership. The FDIC says uninsured depositors will get a certificate of acceptance for their balance.
The regulator said it would pay a further dividend to uninsured depositors next week with the potential for an additional dividend payment as the regulator sells SVB assets.
Whether depositors with more than USD 250,000 ultimately get all their money back will be determined by the amount of money regulators get when they sell Silicon Valley assets or if another bank takes ownership of the remaining assets.
There is concern in the tech community that until the process is uncovered, some companies may have problems creating payroll.
At the end of December, SVB had assets of around USD 209 billion and total deposits of USD 175.4 billion, according to a press release. The FDIC said it was not clear which part of the savings was above the insurance limit.
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The last US bank failure of this magnitude was Washington Mutual in 2008 which had assets of USD 307 billion.
SVB is a big bank for venture-backed companies that are already under pressure from higher interest rates and a slowdown in initial public offerings (IPOs) that have made it harder to raise additional cash.
Silicon Valley Bank Bankrupts, Crypto Company Circle Affected. The closure of the SVB will not only impact deposits, but also credit facilities and other forms of financing. The FDIC said creditors should continue to make payments as normal.
The move was a quick fall for SVB. On Wednesday, the bank announced that it would seek additional capital of more than USD 2 billion or around IDR 30.95 trillion (assuming an exchange rate of IDR 15,475 per US dollar) after suffering a loss of USD 1.8 billion or IDR 27.8 trillion from selling assets.
