Libre Blockchain

Signature and SIVB Depositors are 100% Covered by the United States Government No losses for any customers of these banks with deposits of any sort. Uncle Sam came through for Silicon Valley again. Crisis averted 🤷‍♂️ https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm

Signature Bank Got Closed Down by Regulators And…part two. https://twitter.com/CNBCnow/status/1635043633278914560?s=20

SIVB Deposits are Covered by the US Government This is part one to the announcement.

Circle press release = https://www.circle.com/blog/an-update-on-usdc-and-silicon-valley-bank

Might as well rush and grab some USDC if you can. Free money.

What corporate funds?

JUST IN: Circle $USDC says it will cover any missing liquidity in Silicon Valley Bank using corporate funds. @WatcherGuru

Markets Believe USDC is Insolvent USDC being off its peg for this long means that the market is currently convinced that USDC is effectively insolvent. There's no other way of rationalizing this. USDC isn't like Tether that operates with "private redemptions". USDC is issued with the explicit promise that each issued token can be exchanged for $1 in cash by virtually anyone with said token. Right now USDC is trading at 91 cents per token. The fact that there hasn't been a surge of buy volume to buoy the price back up to $1 despite this guaranteed exchange rate offered by Circle indicates that the market does not genuinely believe they can make good on their redemption promise. If this weren't true, then USDC would be trading at or near $1.

USDC now trading below 88 cents. This route is getting ugly & the further they trade below $1 the more likely it is they become insolvent since they owe redemptions on par with 1 USD (that’s what supposedly makes it stable)

USDC trading at 93 cents means the market doesn't feel confident that it will be able to redeem a USDC back for a dollar at some point in the future. There's a fire sale on USDC right now.

JUST IN: Coinbase temporarily pauses $USDC to USD conversions. @WatcherGuru

So...everything that was just sent into this Telegram 3 or so hours ago concluding that Circle had a few billion parked on SVB at least ended up being dead right.

BREAKING: Circle confirms $3.3 billion of the ~$40 billion $USDC reserves are in collapsed Silicon Valley Bank. @WatcherGuru

Highly Likely Circle is Facing at Least $9B+ of Exposure at SVB (this could be a lowball tbh) Let's do the simple math. We know that Circle banked with BNY Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, Signature Bank, Silicon Valley Bank and Silvergate. Let's evaluate each banking partner below. 1. Silvergate = defunct 2. Signature = virtually defunct; can't imagine Circle is stuffing any substantial sum of funds there 3. Citizens Trust Bank = It was publicly announced on February 24th, 2023, that they were only holding $65+ million here 4. Customers Bank = They had $2.3B+ total in deposits at the end of 2022 and had been dealing with various financial troubles of their own. Even if we assumed the ENTIRE $2.3B+ they had deposited at their institution belonged to Circle, that still leaves us with >$7B+ (cash) unaccounted for at this point. 5. BNY Mellon = Mark them down for 80% of Circle's total assets and cash. As of Circle's most recent reserve report published on March 2nd, 2023, we could confirm that Circle still had $9.9B+ in Treasury loans that had yet to mature. Again, per their announcement in November, they were waiting for said Treasury assets to mature before moving them into BNY Mellon's custody (implying they aren't there). That leaves us with Silicon Valley Bank. As of right now, there are >$9B+ in treasury assets that have yet to mature for Circle that aren't at BNY Mellon (and no other bank is a viable destination for them as they don't custody U.S. Treasury Securities via a BlackRock managed money market mutual fund in accordance with Rule 2a-7 under the Investment Company Act of 1940 like SVB does). Beyond that, there's still >$8.8B+ in cash that's supposedly parked at "financial institutions" as well. Based on what we deduced from our breakdown above, it wouldn't be a far stretch to say most of that money was on SVB (why the fuck not? SVB is the largest and most capitalized bank on that list outside of BNY Mellon by fucking far). Also, Jeremy Allaire can't seem to shut the fuck up whenever a crypto company goes down that Circle "holds no or minimum exposure to". Today? He's been radio silent. Which is really unlike him. One would think if this were all FUD and Circle was good to go, then Jeremy would've posted like 5 different tweet storms by now blasting every publication, news outlet, influencer & otherwise that even dared imply Circle wasn't on the most stable ground known to man.

Question about Circle and their Transition of Cash into a 'Money Market Mutual Fund' (Part 3/3) You can view the prospectus for the BlackRock Liquidity T-Fund here. It specifically states, "The Fund invests in securities maturing in 397 days or less (with certain exceptions) and the portfolio will have a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less." "Dollar weighted average life" = refers to how long it would take for roughly half of the outstanding principal amount on a loan to be repaid (120 days) Circle's announcement about transitioning their funds held in T-bills to their 'Circle Reserve Fund' (which would invest in BlackRock & be custodied by BNY Mellon) came on November 3rd, 2022 and that the transition would complete by the end of March 2023. 120 days from November 3rd puts us at March 3rd, 2023 for half of their outstanding debt to be paid (on a normal payment schedule). With that being said, they likely started making larger payments on that debt (to chop off more of the outstanding principal) in order to shorten the loan term (WAL) [read more about weighted average maturity here]. Long Story Short I'm guessing that Circle was invested in BlackRock's money market mutual fund dating back to April 2022. However, at that time they had those funds custodied at Silicon Valley Bank. When they made that announcement stating, "All of the company's short-term Treasury assets will be phased into the fund" in November 2022, it doesn't seem far fetched to suggest that those 'short-term Treasury assets' were locked into the BlackRock fund custodied by SVB. "What's the Difference Between the Two?" The new BlackRock money market mutual fund that Circle was looking to shift their short-term Treasury assets to was designed exclusively for the Circle Reserve Fund (there are no other investors in the fund) vs. the 'BlackRock Liquidity Funds T-Funds' product offered through SVB, which is not exclusive. Maybe there are other granular details in the fee model of SVB's product that Circle found less advantageous than the alternative exclusive BlackRock T-bill money market mutual fund which would be custodied by BNY Mellon. Whatever the case may be, Circle had no relationships with no other financial institutions that offered such a product through their bank. This is important to note because these are short-term treasury assets (Circle's ultimate goal is to get direct access to the reverse repo market). As noted in the fund prospectus by BlackRock, "The Fund will invest, under normal circumstances, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities, and repurchase agreements secured by such obligations."

Question about Circle and their Transition of Cash into a 'Money Market Mutual Fund' (Part 2/2) As noted above, the plan was for Circle to convert 80% of their $45 billion in cash and short-term Treasury assets were to be phased into the Blackrock fund at BNY Mellon by the end of March. Let's assume they got all of that money into the Blackrock fund (even though its not the end of March yet), that still leaves >$9B+ at "partner banks" (20% remaining). Keep in mind that they're waiting to transition funds to the BlackRock fund (custodied by BNY Mellon). Ok? But that's not when their relationship with BlackRock started. That dates back months prior to April 2022. Beyond BlackRock participating in a $400M+ fundraise round, BlackRock also took on the "***Role as a primary asset manager of USDC cash reserves...[andd] entered into a broader strategic partnership with Circle, which include[d] exploring capital market applications for USDC.**" If you visit SVB's site where they provide information about their 'SVB Cash Sweep' product, you'll see they also advertised a money market mutual fund managed by BlackRock. Specifically the type that Circle said that they were transitioning their funds to (hang on I'm onto something)

Question about Circle and their Transition of Cash into a 'Money Market Mutual Fund' (Part 1/2) Ok, so on November 3rd, 2022, CoinDesk publishes an article titled, 'Circle Begins Putting Reserves into New BlackRock Fund'. Byline reads, "The assets backing Circle Internet Financial’s USDC will finish moving into an SEC-regulated money market fund early next year." Per Circle's CFO (Jeremy Fox-Geen), "This is a wrapper for the USDC reserve that brings benefits of that wrapper to the USDC and the ecosystem." Also, the article notes, "All of the company's short-term Treasury assets will be phased into the fund, though the cash reserve — about 20% of the total — will still be held in partner banks, Fox-Geen said, because it allows for customers to more easily redeem USDC around the clock." The article also noted that their reserves would not be 'fully transitioned' until "the end of March" (its March 10th, 2023, currently). The article goes on to state that, "The assets will be held at the Bank of New York Mellon, according to Circle, where the fund will be subject to regulation under the Investment Company Act of 1940, which requires an independent board and daily reports on the portfolio."

RIP BlockFi Creditors - the $220M+ They Had in SVB Was UNINSURED Per a recent article published by 'The Block' here - https://www.theblock.co/post/218943/blockfi-has-227-million-in-uninsured-funds-in-silicon-valley-bank Apparently the >$220M+ they had parked at SVB was a money market mutual fund. Cursory research online about this type of investment product offered by SVB called 'SVB cash sweep'. Per SVB's site, "SVB Cash Sweep automatically moves cash you’re not using into the money market funds you select from our carefully researched menu." Also, "Although money market funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. Investments in money market funds are not FDIC insured, are not deposits of or guaranteed by any bank and may lose value. SVB Cash Sweep is a product of Silicon Valley Bank." Yikes.

Press Release from FDIC on Silicon Valley Bank Basically outlining the process of receivership for SVB - https://www.fdic.gov/news/press-releases/2023/pr23016.html

This is where the fallout starts ^^^ This is why this channel has been pushing info about SVB nonstop. Doing the math, there was no way this wasn’t going to have some sort of contagion effect on this space.