USDE and FDUSD Experience Brief Depegs Amid Saturday’s Crypto Market Shake-Up

April 14, 2024 Bitcoin.com

Stablecoin issuer Circle weighing up 2024 public launch: Report

November 8, 2023 Coin Telegraph

Acquisition

Circle initially agreed to go public as part of a $4.5 billion merger in July 2021 but that deal fizzled out.

USD Coin (USDC) issuer Circle is contemplating an initial public offering (IPO) in early 2024, according to Bloomberg.

A Nov. 7 Bloomberg report citing people with knowledge of the matter said the stablecoin issuer is talking to its advisers about the move but there’s no certainty the deliberations will result in a public listing.

Circle first agreed to go public in a $4.5 billion merger with Concord Acquisition in July 2021 but that deal fell through.

“Becoming a U.S.-listed public company has long been part of Circle’s strategic aspirations,” a Circle representative told Bloomberg.

Circle remains tight-lipped on the details. “We don’t comment on rumors,” the representatives added.

A potential IPO would see the now-privately owned Circle publicly offer shares for the first time.

Circle was valued at $9 billion in February 2022 after the firm revised its merger deal with Concord. However, USDC’s market cap has fallen 56% from its $55.9 billion peak in June 2022 to $24.6 billion.

Our Chief Economist @gordonliao & his co-authors were honored at #DCFintechWeek for their research showing how stablecoin use for speculative crypto trading has dropped 90% since 2019. More evidence that $USDC utility era is here. Kudos! https://t.co/XTjxc4Sdjr
— Circle (@circle) November 7, 2023

Circle has received investment from financial services firms BlackRock, Fidelity Management, Goldman Sachs, General Catalyst Partners and Marshall Wace.

USDC temporarily depegged from the United States dollar in March due to its $3.3 billion exposure to the now-collapsed Silicon Valley Bank. It bottomed at $0.87 on March 11 before bouncing back to $1 on March 14, according to CoinGecko.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Terraform Labs contends Citadel Securities had a hand in its stablecoin collapse

October 13, 2023 Coin Telegraph

citadel securities

Terraform Labs has urged the judge to grant its motion to compel trading data from Citadel Securities, which it says had a hand in the collapse of USTC in May 2022.

Do Kwon-founded Terraform Labs has again pointed the finger at market maker Citadel Securities for its role in an alleged “concerted, intentional effort” to cause the depeg of its stablecoin in 2022.

On Oct. 10, Terraform Labs filed a motion in the United States District Court in the Southern District of Florida to compel Citadel Securities LLC to produce documents relating to its trading actions in May 2022, around the time its stablecoin, now known as TerraUSD Classic (USTC), depegged.

*Screenshot from filing from Terraform compelling Citadel to provide additional documents. Source: courtlistener*

It contends the May 2022 depeg, when the asset crashed from $1 to $0.02, was caused by "certain third-party market participants” intentionally shorting the stablecoin, as opposed to instability in its algorithm.

“Movant [Terraform] contends that the market destabilization that occurred did not result from instability in the algorithm underlying the UST stablecoin,” said the firm in its motion.

“Instead, Movant contends that the market was destabilized due to the concerted, intentional effort of certain third party market participants to “short” and cause UST to depeg from its one dollar price.”

The motion also cites “publicly available evidence” suggesting that Citadel head Ken Griffin intended to short the stablecoin around the time of the depeg.

“There is publicly available evidence suggesting that the head of the Citadel Entities, Ken Griffin, intended to short UST at or about the time of the May 2022 depeg.”

The filing cited a screenshot from a Discord channel chat in which a pseudonymous trader had lunch with Griffin, who allegedly said “They were going to Soros the f*** out of Luna UST,” presumably in reference to George Soros' trading strategies — centered around highly leveraged, one-way bets.

Citadel Securities has however previously denied trading the TerraUSD stablecoin in May 2022, according to Forbes.

Cointelegraph contacted Citadel for additional comment but did not receive an immediate response.

In its motion, Terraform argues that the documents are crucial for its defense in the lawsuit filed by the U.S. Securities and Exchange Commission in February, which alleges Terraform Labs and its founder, Do Kwon, had a hand in “orchestrating a multi-billion dollar crypto asset securities fraud.”

“This defense will be substantially impaired if Citadel Securities is successful in withholding this limited information,” it stated.

If the court refuses to compel Citadel to produce the trading documents, Terraform requested the matter be transferred to the U.S. District Court for the Southern District of New York for decision by Judge Rakoff.

In July, Terraform Labs sought permission from a judge to subpoena data from bankrupt crypto exchange FTX, also claiming the information could help its defense.

Magazine: Blockchain detectives — Mt. Gox collapse saw birth of Chainalysis

USDR stablecoin depegs to $0.53, but team vows to provide solutions

October 11, 2023 Coin Telegraph

Coin Telegraph

Real-estate-backed stablecoin USDR fell to $0.53 per coin on Oct. 11, but the team said it was merely a liquidity issue and that real estate holdings and digital assets will be used to support redemptions.

Real estate-backed stablecoin USDR lost its peg to the U.S. dollar after a rush of redemptions caused a draining of liquid assets such as Dai (DAI) from its treasury, its project team has revealed.

USDR — backed by a mixture of cryptocurrencies and real-estate holdings — is issued by Tangible protocol, a decentralized finance project that seeks to tokenize housing and other real-world assets.

USDR is mostly traded on the Pearl decentralized exchange (DEX), which runs on Polygon.

An update on $USDR

Over a short period of time, all of the liquid $DAI from the $USDR treasury was redeemed.

This lead to an accelerated drawdown in the market cap.

Combined with the lack of DAI for redemptions, panic selling ensued, causing a depeg.

We’re working on…
— Tangible (@tangibleDAO) October 11, 2023

In an Oct. 11 tweet, Tangible explained that over a short period of time, all of the liquid DAI from the USDR treasury was redeemed, leading to an accelerated drawdown in the market cap, adding:

"Combined with the lack of DAI for redemptions, panic selling ensued, causing a depeg."

USDR experienced a flood of selling at around 11:30 am UTC, driving its price as low as $0.5040 per coin. It recovered slightly, to around $0.53 shortly afterward.

*USDR loses its peg on Pearl DEX. Source: DEXScreener*

Despite the coin losing nearly 50% of its value, the project’s developers have vowed to provide “solutions” to the problem, saying it was merely a liquidity issue that has temporarily challenged redemptions.

“This is a liquidity issue,” they stated. “The real estate and digital assets backing $USDR still exist and will be used to support redemptions.”

Despite this loss to the treasury, the app’s official website stated on October 11 at 9:57 pm UTC that its assets are still worth more than the entire market cap of the coin.

*USDR total backing vs. market cap. Source: Tangible.*

14.74% of USDR’s collateral consists of Tangible (TNGBL) tokens, which are part of the coin’s native ecosystem. The team claims that the remaining 85.26% are collateralized by real-world housing and an “insurance fund.”

Stablecoins are intended to always be worth $1 on the open market. But they sometimes lose their peg under extreme market conditions.

Circle’s USDC (USDC), the sixth-largest cryptocurrency by market cap as of October 11, fell to $0.885 per coin on March 11 when several banks in the U.S. went bankrupt, but it regained its peg on March 14. Terra’s UST lost its peg in May and never recovered. It is valued at $0.01 per coin as of October 11, according to data from Coinmarketcap.

Terra interim CEO says any ‘little progress’ made gets derailed by accusations

July 23, 2023 Coin Telegraph

Chris Amani

Terraform Labs recently appointed CEO, Chris Amani, held a Twitter Spaces with the purpose of separating the operations of Terraform Labs from Do Kwon’s personal affairs.

Terraform Labs faces a “big hill to climb” as the progress of its various projects in development are constantly being impeded by frequent accusations against Do Kwon, according to Terra’s new interim CEO Chris Amani.

During a July 20 Twitter Spaces, titled A Terra Community Talk, Amani joined several Terra employees to discuss the challenges ahead for Terra moving forward. This took place shortly after Amani was appointed as Terra’s new CEO, while the former CEO, Do Kwon, continues to battle legal issues.

He noted that the frequent allegations against Do Kwon, who is currently in a jail cell in Montenegro and facing possible extradition to South Korea or the United States, has shattered any momentum that Terra has been building recently.

“Everytime we would make a little progress there would be some accusation or something that would derail us”.

Cointelegraph reported on June 19 that Kwon was found guilty of attempting to leave Montenegro using a false Costa Rican passport. He was sentenced to four months in prison despite reportedly telling the court that he wasn’t aware the passport was allegedly forged.

Amani commented on Kwon's situation saying it is "incredibly hard" to watch what he is going through right now, expressing his hope that Kwon's name will be cleared so he can "come back and participate" as soon as possible.

In regard to Terra's current developments, Amani revealed there are “maybe 9” different projects at various levels of development to be released over the coming months.

He declared that no new tokens will be launched with any of these new developments, as it will be focusing on “driving utility” back to its native token, Luna (LUNA).

We have 3 projects on the shelf, close to complete, looking for teams to finish off and launch on Terra. If you have a team to take one and want to learn more, let @mc_ust know.
— Chris Amani (@fleece_cannon) July 20, 2023

Amani emphasized that it is going to be a “big hill to climb,” but believes it is not a unique situation within the cryptocurrency industry.

“This is not going to be easy rebuilding; I mean nothing is easy in crypto right now” he said.

He explained that the shortage of liquidity is due to decentralized finance (DeFi) applications having to compete with risk free rate of returns that are “fairly compelling right now.”

He further acknowledged that Terra currently faces difficulty competing with other layer one blockchain projects, as it “doesn’t even have a treasury of Luna."

“Despite the lack of activity in crypto, despite the bear market, it’s still incredibly competitive from a layer one perspective. There are still teams with very big treasuries that can pay developers a lot of money to come build on their blockchain.”

However, he claims that most employees have chosen to stay with the company, despite the controversies it has faced.

“We have been able to hold a large portion of the team that was here before the depeg” he stated.

Magazine: SEC reviews Ripple ruling, US bill seeks control over DeFi, and more: Hodler’s Digest, July 16-22

Stablecoin dominance slides as market cap falls to near 2-year lows: CCData

July 21, 2023 Coin Telegraph

bitcoin spot etf

After 16 consecutive months of decline, the stablecoin market dominance has fallen to 10.3% of the total crypto market capitalization.

The market capitalization of stablecoins has hit the lowest level since August 2021 coming on the back of 16 consecutive months of decline, a new report says.

Cryptocurrency analytics platform CCData released a report on July 20 saying the stablecoin market cap fell 0.82% from the start of the month until July 17, taking the sector's market cap to $127 billion.

Stablecoin market dominance took a slight fall and is currently at 10.3%, dropping from 10.5% in June.

Our latest Stablecoins & CBDCs Report is now live!

Key Highlights:
✔️16-month fall in stablecoin market cap, now at $127bn
✔️ $USDT at $0.73, $USDC at $0.82 on #Binance.US
✔️ $USDP's largest cap drop since 2020, now at $593mn

Full Report https://t.co/A9rFx6pbJx
— CCData (@CCData_io) July 20, 2023

Of the top ten stablecoins, Pax Dollar (USDP) was hit hardest, falling 43.1% to $563 million in July — its lowest figure since December 2020.

CCData believes the fall was largely attributed to MakerDAO — a decentralized autonomous organization behind the Maker protocol — which elected to remove $500 million of USDP from its reserves because it failed to accrue additional revenue.

Tether (USDT), the largest stablecoin by market cap, managed to record its all-time high market cap of $83.8 billion as of July 17, increasing its stablecoin market cap dominance to 65.9%.

The market cap of USD Coin (USDC) and Binance USD (BUSD) fell 3.01% and 4.57% to $26.9 billion and $3.96 billion, respectively. For USDC, it is the seventh consecutive month of decline in its market cap and the lowest since June 2021.

*Most stablecoins market caps have remained relatively stable since May, except for USDP which has fallen 43.1%. Source: CCData.*

Despite consecutive falls, stablecoin trading volumes increased 16.6% to about $483 billion in June, recording the first monthly increase since March.

CCData believes the lawsuits against Binance and Coinbase from the Securities and Exchange Commission (SEC) and the surge in spot Bitcoin (BTC) exchange-traded fund filings contributed to the increase in stablecoin trading volumes last month.

Another major event in June was the suspension of fiat deposits on Binance.US due to the SEC’s lawsuit against the firm. CCData said this led USDT and USDC to depeg from the U.S. dollar on the exchange.

“The suspension of fiat deposits has led to a drastic decline in the liquidity of the [USDT and USDC] stablecoins, resulting in a discount of around 27% and 18% respectively.”

The decentralized stablecoin market, which includes Dai (DAI), Frax (FRAX) and USDD (USDD) increased its market cap by 0.43% to $7.52 billion in July — the first positive month since February. The market cap, however, is still 78.1% down from its all-time high of $34.3 billion in April.

The beginning of this downward trend was triggered by the collapse of the Terra Luna ecosystem and the near 100% depeg of the algorithmic stablecoin TerraClassicUSD (USTC).

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Italy’s central bank calls for framework to prevent stablecoin runs

June 29, 2023 Coin Telegraph

Bank of Italy

Bank of Italy is calling for closer regulator scrutiny of stablecoins, which they say “have not proved stable at all.”

Italy’s top banking authority has called for a “robust, risk-based” regulatory framework for stablecoins, which could help prevent a worst case scenario — a “run” on stablecoins.

The central bank’s recently released Markets, Infrastructures and Payment Systems report for June 2023 has called on regulators to apply the same financial conduct standards to stablecoin issuers in the industry.

#Bankitalia #26June Alessandra #Perrazzelli discussed about the evolving regulatory landscape for #DigitalAssets at @pointzeroforum Panel “State of Global Digital Asset Regulation: Navigating Opportunities in an Evolving Landscape”#PZF2023 #PointZeroForum @sif_sfi @elevandi pic.twitter.com/Jm0OBeifZh
— Banca d'Italia (@bancaditalia) June 26, 2023

The bank said the rise of cryptocurrencies, coupled with several “boom and bust cycles” in a largely unregulated environment has caused “significant consumer harm.”

Regulatory attention on stablecoin issuers in particular should be a priority because of its close connection to DeFi, the bank said:

“A robust, risk-based regulation of stablecoins ensuring the prevention of ‘runs’ on their issuers is a necessary condition to reduce the fragility of the DeFi ecosystem, given the prominent role of this asset class in decentralized finance.”

“It is crucial that policy interventions on stablecoins and DeFi are well synchronized since the diffusion of stablecoins [...] is likely to spur new waves of DeFi innovation and increase the interconnection between traditional and decentralized finance,” it added.

The Italian banking authority also noted that stablecoins “have not proved stable at all” — citing the most notable collapse of Terra’s algorithmic stablecoin TerraClassicUSD (USTC) in May 2022.

The adoption of #DLT solutions, especially if featured by weak organizational structures, could undermine the financial system due to lack of controls, lack of specific rules as mitigation tools, interdependence among regulated and non-regulated entities. The fragmentation is…
— Banca d'Italia (@bancaditalia) June 27, 2023

The bank said the industry also needs to debunk “the decentralization illusion” by acknowledging that most decentralized protocols are operated by core stakeholders who can often “extract ownership benefits.”

“Such projects should be brought back to traditional, accountable business structures as a pre-condition for operating in the regulated financial sector,” the bank added.

The bank however stressed that it isn’t necessary to subject every crypto asset or activity to financial services regulation:

“Not all crypto activities and not all forms of crypto-assets need to be covered or should be covered by financial sector regulation, in particular where their issuance, trading and holding do not serve customers’ financial needs through a payment or investment function.”

Among the non-financial use cases enabled by blockchain are decentralized identification, real estate, supply chain, voting and carbon credits.

Italy’s central bank has also called for countries to cooperate and establish an international regulatory framework because the technology operates irrespective of nation state borders.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

‘Over-Collateralization Can Help Mitigate the Risk of Stablecoin Depegging’ — Pendulum CTO

April 5, 2023 Bitcoin.com

Crypto users turned to DEXs, loaded up on USDC after Silicon Valley Bank crash

March 17, 2023 Coin Telegraph

CEX

The collapse of FTX led to a similar exodus from centralized exchanges, as users worried they may lose access to funds during crises.

The collapse of Silicon Valley Bank saw investors loading their bags with USD Coin (USDC), along with an exodus of funds from centralized exchanges (CEXs) to decentralized exchanges (DEXs).

Outflows from centralized exchanges often spike when the markets are in turmoil, blockchain analysis firm Chainalysis said in a March 16 blog post, as users are likely worried about losing access to their funds when exchanges go down.

*Funds sent from CEXs to DEXs following SVB’s collapse. Source: Chainalysis.*

The Chainalysis data shows that hourly outflows from CEXs to DEXs spiked to over $300 million on March 11, soon after SVB was shut down by a Californiaregulator.

A similar phenomenon was observed during the collapse of cryptocurrency exchange FTX last year, amid fears that the contagion could spread to other crypto firms.

However, data from the blockchain analytics platform Token Terminal suggests that the surge in daily trading volumes for large DEXs was short-lived in both cases.

*Daily trading volumes for large DEXs from September to March. Source:* *Token Terminal*

USDC was identified as one of the top assets being moved to DEXs, which Chainalysis said was unsurprising given that USDC depegged after stablecoin issuer Circle announced it had $3.3 billion in reserves stuck on SVB, prompting many CEXs like Coinbase to temporarily halt USDC trading.

What was surprising, Chainalysis noted, was the surge in USDC acquisitions on large DEXs such as Curve3pool and Uniswap. “Several assets saw large spikes in user acquisition, but none more than USDC,” the blockchain analysis firm wrote.

*Token acquisitions on Uniswap from March 7 to March 14. Source: Chainalysis*

Chainalysis theorized that this was due to confidence in the stablecoin, with some crypto users loading up on USDC while it was relatively cheap and betting that it would regain its peg — which it did on March 13 according to CoinMarketCap.

*USDC’s brief depeg from March 11 to March 13. Source: CoinMarketCap*

Circle ‘able to access’ $3.3B of USDC reserves at Silicon Valley Bank, CEO says

March 15, 2023 Coin Telegraph

Circle ‘able to access’ .3B of USDC reserves at Silicon Valley Bank, CEO says

$3.3 billion

Circle’s earlier disclosure that $3.3 billion worth of USDC reserves were held with Silicon Valley Bank resulted in it losing market share to its competitor USDT.

Circle CEO and co-founder Jeremy Allaire says that since March 13, the stablecoin issuer has been “able to access” its $3.3 billion of funds held with the collapsed bank, Silicon Valley Bank.

Speaking with Bloomberg Markets on March 14, Allaire said that he believed that “if not everything, very close to everything was able to clear” from the failed lender.

USD Coin (USDC) — the stablecoin issued by Circle — briefly de-pegged following news that $3.3 billion of its cash reserves were stuck on SVB.

The stablecoin’s dollar peg has since recovered, but mass redemptions of USDC have resulted in the market cap of the stablecoin dropping by nearly 10% since March 11, according to TradingView.

*The market cap of USDC from March 8 to March 14. Source:* *TradingView*

Meanwhile, throughout the same timeframe, USDC peer Tether (USDT) has recorded a slight increase in its market cap since March 11, climbing by over 1% to $73.03 billion.

The temporarily locked funds had a significant effect on USDC, even though the $3.3 billion represented less than 8% of the token’s reserves, according to its January reserve report released on March 2.

Can never be sure in crypto but, it looks to be ok.

8.25% of Circle’s reserves are stuck… leaving 91.75% of their funds liquid. Even in the case that funds are totally lost, Coinbase will step in to sure up #USDC

Market reaction seems to be just total panic led by recency… https://t.co/vs1junbFys
— tedtalksmacro (@tedtalksmacro) March 11, 2023

The report asserted USDC was over 100% collateralized with over 80% of the reserve consisting of short-dated United States Treasury Bills — highly liquid assets thatare direct obligations of the U.S. government and considered one of the safest investments globally.

depeg

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