Amid the clouds of uncertainty around stablecoins, and banks, Binance’s CEO Changpeng Zhao stated that the exchange will convert the remaining $1 billion Industry Recovery Initiative funds from BUSD to native cryptos, including BTC, BNB, and ETH.
The move comes after the collapse of three banks, Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank in a row. After the USDC issuer, Circle admitted its $3.3 billion USDC reserve is held in Silicon Valley Bank, the situation became intense and triggered a massive sell-off. It caused a de-pegging issue in USDC, sparking another wave of turmoil in crypto.
Turbulence in USDC has started influencing other stablecoins too as DAI, USDD, and FRAX plunged below $1, a pegged value.
It seems like CZ doesn’t want to take a risk, and a move would be considered to help the exchange to fortify against any domino effects similar to the Terra-LUNA crash.
He also shared the link to the on-chain transaction to keep it transparent and clean. The on-chain data depicts that the $980 million worth of funds swapped to native tokens within 15 seconds at a $1.98 transaction fee.
Nevertheless, USDC has successfully recovered its stability by gaining approx $1peg. It happened after SVB’s regulatory administrator, FDIC, declared to give back the full claim of depositors. Circle has also shown readiness to take external funds to cover the shortfall if such a situation occurs.
Also Read: Circle Averts Danger of $3.3B USDC Reserve held in Silicon Valley Bank
In a press release, Circle also stated that “USDC has zero exposure to Silvergate; we had transferred out what were limited reserves to support transaction settlement with USDC prior to bank closure.”
