On Friday, Silvergate Bank announced that it was shutting down its operations and liquidating its business. It confirmed that it will proceed with returning the deposits the clients had made into their accounts.
Surprisingly, the particular bank was the top choice among the cryptocurrency firms and it has now lost its traction.
The major crypto firms such as Gemini, Kraken, and Coinbase had already left the Silvergate Bank so they were out of trouble.
Still, the cryptocurrency industry suffered tremendously due to the bank’s announcement. Turns out, Silvergate Bank is not the only banking firm that is going down.
Silicon Valley Bank (SVB) Faces Financial Crisis
The latest reports suggest that another major banking firm, the Silicon Valley Bank (SVB) has hinted that it is facing a financial crisis.
The firm has already confirmed that it is facing a financial crisis and the contagion has already started taking place.
Several cryptocurrency firms or entities interacting with the crypto industry have revealed that they are exposed to the particular bank.
Circle is Exposed
The officials at Circle recently issued a statement where they confirmed that they are exposed to the latest contagion due to the SVB.
They have a lot of funds stuck at the SVB, which has caused a pullback in the stablecoin that they are issuing.
USDC has Lost its Peg
Circle has been caught up in the contagion that has been caused by the Silicon Valley Bank. Due to the latest developments, the stablecoin issued by Circle, USD Coin (USDC) has ended up losing its dollar peg.
It is a very alarming situation that the trading price of the USDC has plunged significantly. The data shows that with the news coming out about the SVB, the value of the USDC plummeted to $0.87 against the dollar.
However, the price of the stablecoin recovered after some time, which helped push its price to a high of $0.94. The data has been shared by CoinGecko.
$3.3 Billion Worth of Funds are Frozen
Although the situation is still not fully recovered, the officials from Circle have made their claims about things being alright.
They have claimed that their operations are running without any interruptions and the investors should not be worried.
According to sources, the company has $3.3 billion worth of funds reserved at the SVB, which apparently are stuck (frozen).
For now, the situation seems to be in the hands of Circle and the whale investors. The whales found the de-peg to be an opportunity to make investments and acquire more USDC while it was lower than the 1:1 ratio versus the dollar.
This is the reason why the value of the USDC has been pumped to a high of $0.94 from a low of $0.87 and it may continue surging.