Almost immediately after USD Coin (USDC) issuer Circle revealed it could not withdraw $3.3 billion of its $40 billion reserves from Silicon Valley Bank (SVB), the resultant sell-off caused the price of the stablecoin to fall below its $1 peg.

On March 9, Circle initiated a wire transfer to remove its funds from SVB as the Federal Deposit Insurance Corporation-insured bank was about to shut operations. However, two days later, on March 11, Circle confirmed that the wire transfers were not wholly processed, with $3.3 billion of USDC reserves still with SVB.

2/ Like other customers and depositors who relied on SVB for banking services, Circle joins calls for continuity of this important bank in the U.S. economy and will follow guidance provided by state and Federal regulators.

— Circle (@circle) March 11, 2023Data from Cointelegraph Markets Pro and TradingView show that USDC prices fell immediately after the revelation, as shown below:

USDC depegs from the U.S. dollar. Source: CoinMarketCapAt the time of writing, USDC had lost over 10% of its value as it traded at $0.8774. According to Dante Disparte, the chief strategy officer and head of global policy for Circle, SVB is critical to the United States economy and warned that “its failure — without a federal rescue plan — will have broader implications for business, banking and entrepreneurs.

USDC price change metric. Source: CoinMarketCap Disparte further added:

“As with Silvergate, our teams have worked at speed to limit any exposure to banks. This includes a wire transfer request made before SVB’s FDIC receivership. A $3.3 billion cash exposure remains — but we follow state and federal regulatory guidance.”On-chain data further reveals that Circle redeemed $1.4 billion USDC in 8 hours. To reduce exposure, crypto companies, including Coinbase and Jump Trading, redeemed approximately $850 million and $138 million USDC, respectively.

Just two weeks ago, on Feb. 23, USDC issuer Circle announced plans to increase its staff headcount by 25% — going against the ongoing layoff trend.

During the timeline, Circle’s chief financial officer Jeremy Fox-Geen had shared its intent to go public, pending an improvement in market conditions. He added that the crypto industry needs more distance from the Terra and FTX implosions for public investors to re-evaluate the future of digital-assets businesses.