One could ask whether halting trading of a stock is manipulation or not.
Some risks arise mostly out of urgency, and not having countermeasures could have catastrophic results which otherwise would have been avoided by pausing the process.
If Circle were operating as a fractional reserve bank where it borrowed from you by virtue of a positive bank balance, lent me 80% of that, and only kept 20%; pausing honouring withdrawals would likely be illegal.
My view of this is that it's unrealistic to expect a company to store 100% of its assets in immediately avaialable deposits whereas international regulations that apply to banks require ~30 days of liquid supply.
In this case, the legal contract between Circle and its depositors (holders of USDC) is that it'll exchange 1:1.
intrinsically, Circle seems to demonstrate that this contract isn't yet broken, but they can't continue to honour that agreement over a weekend when there's uncertainty of which avenue those funds will come from.
The selling pressure is purely from the secondary market where you're selling me USDC and I'm giving you 0.95 USD.
> Also, if they’ve got many billions in cash, why would losing access to a sliver of it justify shutting down withdrawals?
Because those billions are in T-bills that have to first be sold. And the "cash on hand" is ultimately with banks that are holding a fraction of it.
> “Trust us, it’s worth a dollar! Or don’t trust us! It doesn’t matter because you don’t have any choice but to hold USDC until we deem it advantageous to us to allow you to exchange them for real money!”
Well, "we're enabling redemption on Monday" doesn't equate to the above.
If my pastry shop runs out of already baked goods during the AM peak, I can only ask my customers to wait for me to finish baking more. If there was a pastry regulation, its review would say that I should start baking more pastries in future.