Circle and Sequoia Capital made billions worth of deposits to SVB.
The collapse of the cryptocurrency-friendly Silicon Valley Bank (SVB) in March shook not only the global crypto industry but also the whole financial world.
Three months after the unexpected downfall, news reports claimed that a stablecoin issuer Circle, and a venture capital firm Sequoia Capital were among the most significant depositors.
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The documentation provided by the Federal Deposit Insurance Corporation (FDIC) has reportedly indicated that Circle and Sequoia Capital, as well as several other depositors, had placed enormous sums of money with SVB.
The bank's collapse triggered the Federal Reserve to collaborate with the FDIC to ensure that insured and uninsured depositors would be fully compensated. Notably, this is a departure from the FDIC's usual limit of insuring up to $250,000 per depositor.
The figures related to Circle and Sequoia Capital are eye-catching. Circle's deposits in the bank reportedly amounted to approximately $3.3 billion, while Sequoia Capital's contribution was close to $1 billion.
Other substantial depositors included SVB, SVB Financial Group, the biotech research firm Altos Labs, and a China-based corporation running an online recruitment platform, Kanzhun Limited.
The fall of SVB, closely followed by Signature Bank and First Republic Bank, has triggered a significant reevaluation of how regulators manage deposit insurance in the United States.
In the wake of SVB's crash in March, Circle's exposure of roughly $3.3 billion to the bank caused the company's USD Coin (USDC) to lose its peg to the US dollar.
It is worth noting that, in June, Circle announced its intention to introduce a native version of the USDC on the Arbitrum network.
The downfall of the crypto-friendly Silicon Valley Bank has raised critical questions about deposit insurance practices and risk management in the financial world. This incident, along with the significant exposure of major firms such as Circle and Sequoia Capital, highlighted the inherent risks and unpredictable nature of the financial and cryptocurrency sectors.
