A recent Bloomberg report states that Circle, issuer of the USDC stablecoin, became a major recipient of the government-backed bailout of Silicon Valley Bank (SVB).
According to information obtained from the Federal Deposit Insurance Corporation (FDIC), Circle has more than $3.3 billion in reserves at SVB. These reserves are guaranteed by the FDIC and are therefore safe.
After SVB declared bankruptcy in March, regulators stepped in to protect the bank's creditors in an effort to restore public confidence and maintain economic stability, but the move reignited debate over the extent to which the government allowed financial institutions to take excessive risks.
Circle Internet Financial has the largest amount of deposits at SVB, according to records obtained by Bloomberg from the FDIC under the Material Freedom Act.
During that period, Circle said its securities holdings at the bank totaled $3.3 billion. The next largest depositors were SVB units and Sequoia Capital, a technology-focused venture capital firm. Each of them contributed slightly more than $1 billion.
In March, when the risks to SVB became public knowledge, Circle temporarily depegged its stablecoin from the U.S. dollar.
However, the company has fully recovered since then, as indicated by CEO Jeremy Allaire’s statement at the Consensus conference in April, in which he said they had beefed up their security systems following the incident.
Sequoia Capital, the Federal Deposit Insurance Corporation and Silicon Valley Bank's parent company have remained silent on Bloomberg's allegations.
