The collapse of Silicon Valley Bank (SVB) is affecting not only the traditional financial market but also the cryptocurrency space. The California state government and the US Federal Deposit Insurance Corporation (FDIC) have decided to close and confiscate Silicon Valley Bank’s assets. The bank had assets of $212 billion as of the 4th quarter of 2022. Most of the organizations affected by the SVB are mutual funds and technology startups. However, some cryptocurrency companies have acknowledged the impact of this event. Here is the list of crypto companies at risk of being affected by the collapse of the US bank…
Circle invested $3.3 billion in SVB
Circle, the issuer of the stablecoin USDC, is one of the entities most affected by the SVB. cryptocoin.com As we reported, the company chose SVB to invest $3.3 billion in cash to secure USDC. The project is currently awaiting a resolution from the federal government. The collapse of the SVB caused investors to switch from USDC to other stablecoins, causing the USDC price to drop to $0.87.
Circle has burned over $2.34 USDC in its redemption process in the past 24 hours. Circle had previously cut ties with Silvergate, a bank that ceased operations on Wednesday, March 8. The decline of USDC, the second largest stablecoin in the market, is heavily impacting other stablecoins collateralized by USDC. Frax Finance’s stablecoin, FRAX, has the highest USDC collateral ratio at 92 percent. DAI from MakerDAO also holds 48.3 percent of the reserves in USDC.
Troubled cryptocurrency firm BlockFi ranks second
BlockFi, a lending platform, is second on the list. The company filed for bankruptcy after the FTX exchange crashed. BlockFi’s bankruptcy filing reports that more than $227 million of the company’s assets are held in the SVB. However, this money was not insured by the FDIC as it was in a foreign exchange market fund. BlockFi had previously suspended withdrawals, and a $250 million line of credit was offered by FTX in June 2022.
Yuga Labs may also be associated with SVB
Yuga Labs, the company behind the popular NFT collection Bored Ape Yacht Club, is also influenced by SVB. But Gray Solano, co-founder of Yuga Labs, stated that the impact of the incident was limited. Still, he said that Yuga could not give a specific figure.
Crypto company Proof was among the hardest hit.
Proof, another leading company in the NFT space, seems to be more impressed. Proof co-founder Kevin Rose said the company has invested money in SVB. “Proof has cash in SVB. However, we have diversified our portfolio with various assets such as ETH, stablecoins and fiat currency.” While Proof did not provide a specific figure, the project confirmed that customers’ assets would not be affected.
Cryptocurrency investment fund Pantera mentioned the bank
At this time, the mutual fund has not disclosed a specific figure. However, the company did mention the bank as one of three auditors of its funds in a report it sent to the SEC on March 2. Pantera is considered one of the largest mutual funds in the world. In 2022, the fund raised $1.3 billion in investments in blockchain projects.
Avalanche (AVAX), one of the largest cryptocurrencies, is also on the list.
The Avalanche Foundation, the organization behind the development of the Avalanche network, announced that it has $1.6 million in Silicon Valley Bank. While this figure is relatively modest compared to other entities, Avalanche’s token, AVAX, has a market cap of around $4.84 billion. “We want to confirm that the Avalanche Foundation is unaffected by Silvergate and has only $1.6 million in SVB,” the company said in a statement. He also expressed regret over the situation of Silvergate and Silicon Valley Bank.
There are also concerns for Nova Labs
Nova Labs, the company behind the Helium (HNT) decentralized internet network, also announced its case with SVB on March 10. “Nova Labs has some money in SVB, but most of its assets are held in other entities,” said Amir Haleem, CEO of Nova Labs.
DYDX made a statement
Finally, dYdX came to the fore with a statement by Circle regarding USDC. This indicates that many companies are indirectly affected by the situation. Decentralized exchange dYdX announced that it will continue to function even if the price of USDC deviates from its fixed value of $1. USDC is a fully collateralized stablecoin managed by Circle and dYdX uses it as collateral for trading. This announcement came as a relief for traders who were concerned about the potential impact on their positions if the value of the USDC fell.
dYdX stated that all positions, collateral and funding payments in USDC will appreciate less in USD terms if there is a decline in USDC. However, traders will not be liquidated as a result of USDC-USD price changes. A position’s notional value, margin pools, and funding payouts are all measured in USDC, meaning that in the event of a USDC drop, dYdX will continue to operate as normal. As a result, after the collapse of Silvergate, the collapse of the SVB had a significant impact on the cryptocurrency market.
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