A recent report by Bloomberg states that Circle, the issuer of the USDC stablecoin, emerged as a primary recipient of support from the government-backed rescue of Silicon Valley Bank (SVB).
According to the information acquired from the Federal Deposit Insurance Corporation (FDIC), Circle had more than $3.3 billion in reserves at SVB. The FDIC guaranteed these reserves and were thus safe.
After the SVB declared bankruptcy in March, the regulatory agencies stepped in to protect the bank’s creditors to regain the public’s confidence and maintain economic stability. However, due to this action, discussions over the degree to which the government allows financial institutions to incur excessive risks have been rekindled.
Records acquired by Bloomberg under the Freedom of Material Act from the FDIC reveal that Circle Internet Financial owned the highest amounts of deposits at SVB.
During that period, Circle said that it had securities at the bank totaling $3.3 billion. The following large depositors were SVB units and Sequoia, a venture capital company with an emphasis on technology. Each of them contributed a little over one billion dollars.
When it became public knowledge in March that SVB had been exposed to risk, Circle momentarily disconnected its stablecoin from the U.S. dollar.
However, since then, the firm has made a full recovery, as shown by CEO Jeremy Allaire’s statement at the Consensus conference in April, in which he said that after the event, they had strengthened their security systems.
Sequoia, the FDIC, and SVB’s parent firm remained silent in response to Bloomberg’s allegations.