Crypto News: As more information about the tragic weekend of the USDC depeg continues to surface, the newest development in the wake of the failure of Silicon Valley Bank is the introduction of a credit line with a value in the multi-billion dollar range. It has been reported that Coinbase made a massive offer of $3 billion to Circle, the crypto company that issues the second-largest stablecoin in the world, USD Coin (USDC), in a bid to bring it back to its $1 peg.
Coinbase Allegedly Offered $3B Backstop
As the stablecoin lost its peg to the U.S. Dollar the previous week, Circle reportedly requested an emergency credit line in order to secure the continued stability of USDC — according to a report published by Fortune. The de-pegging event took place after Circle disclosed a $3.3 billion exposure to Silicon Valley Bank not long after the financial institution was taken over by the Federal Deposit Insurance Corporation (FDIC).
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According to reports, Coinbase had provided an emergency line of credit to Circle that would have guaranteed to cover the entire liquidity for USDC reserves and assured the stablecoin could be converted to U.S. dollars on Monday morning following Silicon Valley Bank’s failure. The companies were almost certain of revealing the credit facility, but on the same Sunday, banking authorities lifted the FDIC and alleviated the sense of trouble.
The USDC Depegging Fiasco
As reported earlier on CoinGape, Circle had planned transactions to move its deposits out of Silicon Valley Bank barely days before the regulatory authority ordered the bank to close its doors. The announcement that SVB was going to be defunct and Circle had cash that was stranded prompted considerable FUD among investors, who then hurried to withdraw their funds from the stablecoin.
As a direct consequence of this event, USDC de-pegged from the US Dollar, and for a short period of time, the stablecoin traded at a price lower than 90 cents. As things currently stand, the price of USDC is exchanging hands at its $1 peg with a market cap of $35 billion.
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