Circle’s Operational Update: A Light at the End of the Tunnel

On March 15, Circle, the issuer of the USD Coin (USDC), voiced relief as it announced that it had successfully redeemed $3.8 billion in USDC and minted an additional $0.8 billion in responses to customer requests between March 13 and the close of banking operations on March 15.

The Bank Run That Shook Stablecoins

Last week, Circle was rocked by a bank run that stemmed from the revelation of holding $3.3 billion in reserves at the now-defunct Silicon Valley Bank. This led to a significant drop in USDC’s dollar peg, causing a flurry of panic among investors.

Liquidity Operations Affected

As Circle noted in its operational update, “The events of the past week have impacted the liquidity operations for USDC.” With both redemption and minting services hampered, Circle has been scrambling to partner with alternative banking institutions to stabilize its operations.

New Partnerships: A Path to Recovery

On March 14, Circle went live with a new banking partner to facilitate U.S. wire transfers and, by March 15, had extended this partnership to cover international wires across 19 countries. Cross River Bank was identified as a key partner, providing necessary services for USDC production and redemption.

The $2 Million Misstep

Amid the tumult, one particularly unfortunate user tragically overpaid more than $2 million for a mere $0.05 worth of USDT in a frantic attempt to escape the crisis. It appears they may have neglected to set slippage in their transaction, allowing a bot to seize a hefty profit from their misfortune.

Looking Ahead

While the past week has been tumultuous, Circle remains optimistic and aims to enhance its capabilities in the coming days. As the dust settles, both users and the broader market await the restoration of stability in USDC’s operations.