23. Juli 2024

Circle Moves USDC Reserves Out of Troubled Silvergate Bank

  • Circle moves its USDC reserve deposits out of Silvergate Bank
  • Silvergate Bank recently closed its SEN Platform used to move money to crypto exchanges
  • Circle moved the small percentage of USDC it held in Silvergate due to ongoing uncertainty at the bank

Circle Moves USDC Reserve Deposits Out of Silvergate Bank

Circle has announced that it has moved its USDC reserve deposits out of Silvergate Bank due to ongoing uncertainty at the bank. Silvergate bank recently closed its SEN Platform which institutions used to move money to crypto exchanges. Coinbase, Galaxy and Paxos have stopped accepting transfers via Silvergate Network.

Background on Silvergate Bank’s Troubles

In a filing on Wednesday, Silvergate set off alarms with a statement that said losses might leave the bank with less capital than it needs and that it was evaluating its ability to continue. The bank also suspended preferred stock dividends. This caused an immediate plummet in shares following these events and key partners including Paxos Trust Co., Coinbase Global Inc., and Galaxy Digital Holdings Ltd cut off ties with the bank. Other crypto firms also decided to stop accepting payments through Silvergate, threatening the banks key source of deposits.

Circle Takes Action by Moving Funds Out of Troubled Bank

In response, Circle noted that their top priority is protecting the reserve funds backing USDC even if it meant cutting off ties with Silvergate Bank. Interestingly, Circle started withdrawing its USDC deposits from Silverge last year when signs of trouble became increasingly visible on their end. Circle maintains that their USDC reserves are held in the Circle Reserve Fund in several well-capitalized U.S banks and is reviewed monthly by Deloitte, a leading audit firm.

Other Cryptocurrency Companies Follow Suit

Following Circles decision other cryptocurrency companies have taken similar action as they seek secure ways for customers to manage their digital assets without encountering risk exposure from troubled banking partners such as Silvergeatebank .

Conclusion

Protecting customer funds is paramount for any financial services company, particularly one operating within the volatile cryptocurrency space where security breaches can cause serious damage both financially and reputationally. As such, many companies are taking extra precautionary steps by moving away from unreliable banking partners such as silvergeatebank