Stablecoin issuer Circle and venture capital firm Sequoia Capital were reportedly among the top 10 depositors of crypto-friendly Silicon Valley Bank (SVB) that failed in March.
According to a Bloomberg report on June 23, the Federal Deposit Insurance Corporation (FDIC) provided documents suggesting Circle, Sequoia and others were covered by billion-dollar deposits. Following the SVB bankruptcy, the Federal Reserve announced that it would work with the FDIC to indemnify both insured and uninsured depositors (in most cases, the FDIC only insures up to $250,000 per depositor).
Apparently, Circle had about $3.3 billion in deposits, while Sequoia had about $1,000. Other major depositors included Silicon Valley Bank itself, SVB Financial Group, biotech research firm Altos Labs, and Kanzhun Limited, a China-based company behind a major online trading platform.
WHOA. The FDIC accidentally posted an un-redacted document showing that the big VC firm Sequoia had $1 billion on deposit at SVB when it collapsed pic.twitter.com/Ys1qbHnvDr
— Joe Weisenthal (@TheStalwart) June 23, 2023
WOW! The FDIC accidentally released a redacted document showing that big VC firm Sequoia had $1 billion on deposit at SVB when it collapsed
The bankruptcy of SVB and the subsequent collapses of Signature Bank and First Republic Bank have cast a spotlight on the way US regulators manage deposit insurance. Although the Fed, FDIC, and Treasury Department claimed that coverage of SVB and Signature deposits above $250,000 was part of a “systemic risk exception,” they appear to have considered increasing the insurance limit.
Following SVB’s bankruptcy in March and confirmation by Circle that it had some $3.3 billion of exposure to the bank, the firm’s currency USD Coin (USDC) was briefly delinked from the US dollar. In June, the stablecoin issuer announced that it planned to launch a native version of USDC on the Arbitrum network.
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