Circle/USDC fooked around Paxos/BUSD and now they are finding out. All the xenophobia towards Binance showed who the real ones are. CZ is Canadian too and grew up there.
Coinbase suspending USDC:USD conversions over the weekend
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Re: Coinbase suspending USDC:USD conversions over the weekend
#62USDC is managed the Centre consortium, which was founded by Circle and includes Coinbase as a member. Circle held around $3.3 billion in Silicon Valley Bank, leading to a run on USDC which resulted in it trading for as little as $0.95 on some exchanges today (Mar 10, 2023). This represents around 30% of USDC's cash reserves and 7% of its total reserves. The balance of reserves are held in T-Bills, which are liquid an…
It was all fun and games while the crypto bubble was inflating. You basically could do no wrong, any mismanagement would be hidden away by the exponential appreciation of the underlying assets; just hodl until the next bull run and everything would be fine again.
When things stabilize and start going down, it's like the morning after the frat-party, bad things come to light. Crypto is fundamentally a negative sum game, it takes enormous resources to run and has generated a large number of self-minted millionaires that have cashed out and lamboed their earnings. There is very little actual marketable utility that crypto provides that could cover these large outlays, perhaps with the exception of facilitating money laundry and illegal transactions. I guess that's a business, but (hopefully) not a multi-trillion business suggested by the bubble's peak.
So it's inevitable the game must end with someone holding the bags.
Re: Coinbase suspending USDC:USD conversions over the weekend
#63Earlier quoted context omitted.
Coinbase should be buying that USDC on chain. They can guarantee it's worth $1 to themselves.
They can't if the USD backing the USDC is stuck in SVB.
I mean with their on chain liquidity. They’d have first right to honor the exchange with themselves so unlike someone else trying to redeem it, they have no counter party risk. Each $.80 token the buy on chain could write off a $1 USDC position.
Re: Coinbase suspending USDC:USD conversions over the weekend
#64Earlier quoted context omitted.
Can't help but revel in the fact that these crypto ponzi schemes are so dependent on the very banks all the cryptobros denounce, as evil holdovers from the past that will be obsoleted by their scam tokens (that no one outside their bubble even knows how to use). It's so ridiculous I just have to kind of admire it. It's like a cathedral of human hypocrisy.
How is a stable coin a Ponzi scheme?
Plenty of stable coins have been proven to be ponzi schemes.
Terra/Luna anyone?
Re: Coinbase suspending USDC:USD conversions over the weekend
#65Earlier quoted context omitted.
The balance of reserves are held in T-Bills, which are liquid and typically can only be traded during market hours. Ok I'll buy that if you or I wanted to sell treasury bills, but... if a company needs to liquidate $10B of treasury bills over the weekend, can't they just call up the CEO of JPMorgan and say "hey we'll give you 10 basis points over Monday's 9AM rate" and make a deal happen?
They can try, but no guarantees.
Fair enough. Technically there's no guarantee that the treasury bill market won't lock up on Monday morning either, but I agree that's a more remote possibility.
Re: Coinbase suspending USDC:USD conversions over the weekend
#66Earlier quoted context omitted.
When its assets don’t exist.
Is a bank a ponzi scheme if its assets don't exist also? Like if a bank has $10B in customer deposits and one of their armored truck drivers escapes across the border with $2B, then some customers can't be paid back when they try to withdraw, does that make it a ponzi?
If you can't be paid at all it's not a Ponzi. The point is to rely on newer funds to pay the older requests.
Re: Coinbase suspending USDC:USD conversions over the weekend
#67Tether, the Sauron of stablecoins, has zero exposure to SVB and is holding the peg just fine. Sorry Patio and friends, maybe next time :)
> Tether has zero exposure to SVB
It turns out if you have no assets you have no exposure.
Re: Coinbase suspending USDC:USD conversions over the weekend
#68Earlier quoted context omitted.
Can't you just buy USD directly? How does that help? What does the C part of it do?
No, in many countries you cannot buy USD directly. You also cannot store USD in a local bank account. And in various places it's explicitly forbidden to hold USD as savings because it would devalue local currency if everyone started transacting in USD instead. So, the "C" makes USD exposure available to anyone worldwide, assuming you have e.g. an Ethereum wallet.
Except it does a lot more than that as highlighted here. It's not just a USD + exposure. It's pretend to be USD + its own set of risks. I'd rather buy USD or if you can't then do something else.
Re: Coinbase suspending USDC:USD conversions over the weekend
#69Earlier quoted context omitted.
now .89 there are no freebies in finance. no one knows what is left. probably less than many think.
Coinbase should be buying that USDC on chain. They can guarantee it's worth $1 to themselves.
The fact that they're not (as you note, it's free money) is itself a gigantic red flag.
Re: Coinbase suspending USDC:USD conversions over the weekend
#70Earlier quoted context omitted.
Can't you just buy USD directly? How does that help? What does the C part of it do?
It is also kind of an abstraction over cash and treasury bonds. A more liquid fractionalised cash/bond unit. Though that seems to have been the problem here. The original idea with a 100% collaterilised peg was that the entire reserve would be cash. Somewhere along the way treasury bonds were considered cash equivalent. Which on the face of it seems sort of reasonable but clearly they do have a different risk and liq…
The difference is at least with banks e.g. SVB here you get back your 250k. When these coins die you get 0.
And if only we're true to the "original idea" (whatever that might be). As seen with lots of coins / exchanges it's been a front to do something else.