As Redemption Kicks In Hundreds Of Millions Of USDC Get Set To A Null Address
Watchers, an analytics platform from the Web3 industry has just shared a report involving a huge transfer of USD Coins (USDC).
The report shows that a huge transaction worth 314.167 million USDC has been carried out. The transaction involves the funds being sent by the issuer of the stablecoin itself, Circle.
Funds Sent by Circle
The teams at Watchers have shared their findings involving the huge transfer for the USDC tokens. It was Circle itself that processed the transaction and the address to it sent the funds, is very concerning for the crypto community.
The findings reveal that the particular transaction has been made to a null address, which is based on the Ethereum blockchain. They confirmed that the transaction was registered on March 13.
The null address is not a wallet where the funds are sent to reside. Instead, the funds are disposed of, so they no longer remain part of the system (circulation).
This is the reason why null address transactions are referred to as one-way transactions. This way, the issuer or the user proceeds with the disposal of the tokens.
Announcement by Circle
On March 12, the officials at Circle made an announcement involving the US Treasury. They announced that the regulatory authority (FDIC) will be returning all of the $3.3 billion worth of funds stored at the Silicon Valley Bank.
These funds were the reserves that were stored by Circle on the SVB. However, with the crackdown of the FDIC, these funds were confiscated and there was huge uncertainty pertaining to the retrieval of the funds.
However, the US Treasury confirmed that the funds will be returned to the depositors accordingly. The market data suggests that 8% of the total reserves of USDC were stored at the particular bank.
Following the announcement by the regulators, the officials talked about the mission of their company. They stated that they have always wanted to offer their users with safety and a trustworthy platform.
Their mission has always been to provide their users with 100% redemption access when it comes to the value of the USDC.
They would never want the USDC to become a de-pegged token and they will do whatever they can to ensure they keep delivering that.
No Interruption in Operations and Delivery
According to Circle, they have always wanted to offer the best services and utilities to their users. They will continue offering their services even when the contagions end up impacting the banking institutions.
They also thanked the government of the United States and the financial regulatory authorities for their support and help.
They praised how the regulators have been working together with the government to ensure that the risks within the crypto industry are mitigated.
Their efforts will also ensure that the banking firms do not end up getting connected with the crypto firms and entities that are unregulated and risky.
USDC’s Reputation has been Hit
Although the USDC recovered from the shortfall in a matter of two days, still, the reputation of the token has been hit.
The token has always boasted of having full reserves as collaterals in supporting the USDC value. However, the regulators have started going after the banks that are supporting the crypto firms.
Shockingly, Circle also became the indirect target of the regulatory crackdowns against such banks. It had $3.3 billion in reserves stored at the SVB.
This goes to show that even the funds of Circle being held at the banking firms are not safe. This has raised many concerns among investors who are heavily concerned about the future of their funds.
It was on March 10 when the USDC ended up getting de-pegged for the first time ever. It ended up dipping to $0.87 before recovering to $0.94 and then to a high of $0.95.
After hitting the $0.95 level, the trading price of the asset surged to $1.00, regaining its 1:1 peg.