SAN JOSE — Stablecoin slumped to an all-time low Saturday after Circle, the U.S, firm behind the coin, revealed some of the reserves backing it were held at Silicon Valley Bank.
They were not alone.
Roku held approximately $487 million of its $1.9 billion in cash at the bank, which collapsed Friday and was taken over by the Federal Deposit Insurance Corporation, the streaming technology company disclosed in an SEC filing.
That’s approximately 26% of the company’s cash and cash equivalents, Roku said, adding that most of its deposits with the bank are uninsured.
“The company’s deposits with SVB are largely uninsured,” Roku said. “At this time, the company does not know to what extent the company will be able to recover its cash on deposit at SVB.”
However, Roku said it has enough existing cash and cash flow from operations to “meet its working capital, capital expenditures, and material cash requirements from known contractual obligations for the next twelve months and beyond.”
SVB collapsed Friday morning after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history.
California regulators closed down the tech lender and put it under the control of the FDIC.
The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors.
A toy company based in New York has also gotten caught up in the bank’s collapse and was pleading with customers for help keeping it afloat.
Camp, a venture-backed retailer, sent an email to customers Friday announcing it was slashing prices and would use sales to help fund its continued operations after much of its money was tied up in the bank failure.
“Unfortunately, we had most of our company’s cash assets at a bank which just collapsed. I’m sure you’ve heard the news,” co-founder Ben Kaufman said in an email to customers.
He urged customers to use the code “BANKRUN” to save 40% off all merchandise, in an apparent nod to the run on the bank that may have helped bring down the Silicon Valley lender. Camp also said customers could pay full price, which it said would be appreciated.
Kaufman said the company was “hopeful that this will be resolved soon.”
Roblox also said in a filing that 5% of its $3 billion in cash was held at SVB. The video game company said the collapse will not affect its day-to-day operations.
Crytpo lender BlockFi, which filed for bankruptcy in November, disclosed it held $227 million with SVB in a bankruptcy filing Friday.
BlockFi said in November it had halted withdrawals after facing “significant exposure” to Sam Bankman-Fried’s FTX exchange, as well as its sister hedge fund Alameda.
BlockFi’s money in SVB is not FDIC-insured because it was in a money market mutual fund, the company learned from its bankruptcy trustee early this week.
And aerospace manufacturer Rocket Lab held almost 8%, or approximately $38 million, of its total cash at the collapsed bank, it said in a Friday filing.
Circle has $3.3 billion of its $40 billion of USDC reserves at the bank, the company said in a tweet Friday.
The coin broke its 1:1 dollar peg and fell as low as $0.88 early Saturday, according to market tracker CoinGecko. It recovered slightly to trade around $0.90.
Circle said in a tweet Friday it and USDC “continue to operate normally” while the firm waits for clarity on what will happen to bank depositors.
Circle did not immediately respond to a request for comment about the dollar peg, sent outside of US working hours.
Stablecoins are cryptocurrencies designed to maintain a constant exchange rate with “fiat” currencies — those backed by a central government rather than a physical commodity such as gold — for example through a 1:1 US dollar peg.
Used in cryptocurrency trading, they have surged in value in recent years. USDC is the second-biggest stablecoin with a market cap of $37 billion. The largest, Tether, has a market cap of $72 billion, according to CoinGecko.
USDC’s price usually holds close to $1, making Saturday’s drop unprecedented. According to CoinGecko data, its previous all-time low was around $0.97 in 2018, though in 2022 it fell just below $0.99 when cryptocurrency markets were roiled by the collapse of crypto hedge fund Three Arrows Capital.
Traders have been on guard this week for signs of contagion in the financial sector and beyond from troubles for Silicon Valley Bank and crypto-focused Silvergate, which this week disclosed plans to wind down operations and voluntarily liquidate.
Boston-based Circle said last week it had moved a “small percentage” of USDC reserve deposits held at Silvergate to its other banking partners.
The chief executive of cryptocurrency exchange Binance said in a tweet on Friday it had no exposure to Silicon Valley Bank, as did Tether Chief Executive Paolo Ardoino.
Stablecoin issuer Paxos and crypto exchange Gemini also tweeted they do not have relationships with the bank.
Following the bank’s collapse on Friday, uncertainty in the startup community also only grew, with founders worrying about getting their money out, making payroll and covering operating expenses.
“Now that the bank has folded, I just want to know what happens next,” Ashley Tyrner, founder of health food delivery company FarmboxRx, told CNN in an e-mail. “The FDIC covers 250K, but am I going to recover my whole 8 figures?”
Parker Conrad, the CEO and co-founder of HR platform Rippling, said Friday that his company has learned that some customers’ payrolls are being delayed due to the bank’s “solvency challenges.”
“Our top priority is to get our customers’ employees paid as soon as we possibly can, and we’re working diligently toward that on all available channels, and trying to learn what the FDIC takeover means for today’s payments,” he wrote on Twitter.
Arjun Sethi, an investor at Tribe, tweeted Friday that “right now VCs are writing emails to disclose SVB exposure.” Meanwhile, Sam Altman, the CEO of OpenAi and former president of startup accelerator Y Combinator, said investors should consider offering “emergency cash to your startups that need it for payroll or whatever.”
He added: “no docs, no terms, just send money.”
At least one company attempted to get money quick, by offering a last-minute sale.
