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An Update on USDC and Silicon Valley Bank

circle.com

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Re: An Update on USDC and Silicon Valley Bank

#191

Post by danaos »

everfree wrote: post #111
danaos wrote: post #49

I have always kept away from circle after they were caught manipulating reviews. https://www.reddit.com/r/Bitcoin/comments/5ms1zc/after_being...

There are lots of financial incentives for people to review bomb the app in both directions. Is there any evidence that it wasn't third parties manipulating the reviews both times in both directions? I'm imagining a second thread on a different forum, nearly identical to the thread you linked and just as ideological, with a title like "After Circle was unfairly review-bombed with 1 Star reviews by haters, our communi…

You have a point. If I remember correctly this event is related to the SegWit drama. Circle was not among the biggest supporters of the upgrade.

Re: An Update on USDC and Silicon Valley Bank

#193

Post by PheonixPharts »

mike_d wrote: post #169
PheonixPharts wrote: post #146

Earlier quoted context omitted.

> I can't see this not returning to it's peg by the next news cycle. It's free money. But isn't this the problem? If over the weekend billions of dollars of USDC is purchased at less that $1 from people expecting to cash in on "free money" come Monday, Circle is going to have to be able to ensure that that actually happens, which could easily require more liquidity than remotely possible (edit: I just realized that C…

> I'm far from a crypto expert so could you clarify what I'm missing? USDC isn't an algorithmic stablecoin or backed by non-cash assets. It is a coin that is redeemable 1:1 for cash, always. They have approximately $40b in coins and is only "short" $3.3b. Right now the first 91% to redeem can still get a full dollar, not everyone who redeems gets 91 cents. People who have no idea how it works are panic selling fearin…

> It is a coin that is redeemable 1:1 for cash, always.

That's what I realized after doing some more research. This is really a test of Circle's claims. If circle really has 1-1 liquid assets to cover all USDC, this is a non-issue and many people will make some very easy money after this weekend.

If, however, it's assets are not as liquid as claimed or not as 1-1 as claimed, then USDC and Circle will likely collapse Monday morning, quite possibly taking down Coinbase and much more with them.

Re: An Update on USDC and Silicon Valley Bank

#194

Post by spywaregorilla »

hn_throwaway_99 wrote: post #165
spywaregorilla wrote: post #158

Earlier quoted context omitted.

> No, rvnx is correct. SVB held many of these assets as "hold to maturity" assets. He is wrong. This is just an accounting term / treatment. You can still sell them, and will obviously recognize the loss when you do. Had they been 3 month bonds, they could have been sold for basically full value and remained solvent. Yeah, obviously the bank would have no problem if there were no bank run. But the reason there was a…

There are a significant amount of other banks that are in the same situation with respect to long term bonds that have lost a lot of their value due to rising rates. The difference for many of them, compared to SVB, is that they have a much more diversified deposit base, so they don't have the same dynamic of the majority of their depositors all needing their money out due to VC funding drying up. The fact that bonds…

That is not correct.

Yes, the bank could hold the bonds to maturity to get $100 back in 10 years. But that $100 dollars in the future is worth much less than having $100 now.

SVB depends on earning net positive amounts on their interest income to continue operating. Turning $100 into $100 10 years later is the same as turning $100 into $90 now (illustrative numbers. The issue is of course varying interest rates).

Re: An Update on USDC and Silicon Valley Bank

#195

Post by latchkey »

mike_d wrote: post #168
latchkey wrote: post #109

Earlier quoted context omitted.

Trying to arb usdc.

You mean trading assets for other assets to turn a profit, literally the entire point of Coinbase Pro?

No, I don't mean that. CBP is fine for them, since they earn fees on it.

If you pull your funds off CB into a DEX and then do the arbitrage, that's when they get unhappy.

Yes, that's happened to someone I know. Their account was locked as soon as CB figured out that is what they were being used for. They don't like just being a fiat ramp since it doesn't earn them anything.

Re: An Update on USDC and Silicon Valley Bank

#196

Post by latchkey »

SparkyMcUnicorn wrote: post #150
latchkey wrote: post #105

Earlier quoted context omitted.

> Right now, Circle isn't willing to buy USDC for $1 USD https://www.circle.com/blog/an-update-on-usdc-and-silicon-va...

Where does it say that? All I see is the exact opposite being said.

> "In such a case, Circle, as required by law under stored-value money transmission regulation, will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary."

Re: An Update on USDC and Silicon Valley Bank

#197

Post by tsimionescu »

charcircuit wrote: post #183
tsimionescu wrote: post #179

Earlier quoted context omitted.

Is there any proof that anyone has ever successfully redeemed USDT from Tether?

Yes, there are even people on HN that have reported successful redemption of tether for USD. You can ask people directly. It's not like this is a rare thing that never happens. If people weren't able to do so you would expect people to actually make claims aginst it.

I have not seen anyone on HN ever claim to have exchanged the necessary 100K USDT for $99k or 1M+ USDT for $1M+ with Tether's parent company.

Re: An Update on USDC and Silicon Valley Bank

#198

Post by charcircuit »

tsimionescu wrote: post #197
charcircuit wrote: post #183

Earlier quoted context omitted.

Yes, there are even people on HN that have reported successful redemption of tether for USD. You can ask people directly. It's not like this is a rare thing that never happens. If people weren't able to do so you would expect people to actually make claims aginst it.

I have not seen anyone on HN ever claim to have exchanged the necessary 100K USDT for $99k or 1M+ USDT for $1M+ with Tether's parent company.

Look back to one of the Tether submissions and you will find someone who says that their company was able to do it.

Re: An Update on USDC and Silicon Valley Bank

#199

Post by LawTalkingGuy »

incrudible wrote: post #78
l-lousy wrote: post #36

Earlier quoted context omitted.

That day will be when they finally release an audit

They may well be 100% collateralized in bad collateral. Same for USDC really, except the collateral is not as bad.

100% of $0. Tether is entirely a scam by intentional criminals and not a single dollar is in a vault.

They say they're 1:1 backed but have committed obvious financial fraud around this. There's no benefit to them to be even 95% backed, it's 100% or jail, so why would they bother?

This is how they maintain the peg perfectly - it's all fake. They "redeem" their friend's Tether with their personal funds but they won't even try if there's a run.

Re: An Update on USDC and Silicon Valley Bank

#200

Post by charcircuit »

capableweb wrote: post #190
easrng wrote: post #140

Earlier quoted context omitted.

If Circle blacklists you and your funds you can't do anything with them at all afaik.

That's not true. They still live on a blockchain not controlled by them, so you can still send them around from account to account. You won't be able to get USD from them though via a CEX.

The smart contract on the blockchain allows them to blacklist addresses upon request from law enforcement.
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