Given Silicon Valley Banks direct involvement in destabilizing USDC prices, CZ blamed banks for increasing the risks of stablecoins. 12993 Total views 27 Total shares Listen to article 0:00 News Own this piece of history
Collect this article as an NFT The death spiral of the Terraecosystem served as a catalyst to the 2022 bear market causing losses in the billions, damaging investor sentiment and intensifying the regulatory spotlight over cryptocurrencies. However, the recent depegging of Circles USD Coin (USDC) led Binance CEO Changpeng CZ Zhao to believe that traditional banks are a risk to stablecoins that are usually pegged 1:1 with fiat currencies, like the U.S. dollar.
On March 11, Circle disclosed that Silicon Valley Bank (SVB) did not process its $3.3 billion withdrawal request. The crypto market responded to the revelation by selling off USDC holdings, causing the U.S. dollar-backed stablecoin to lose its peg. Given SVBs direct involvement in destabilizing USDC prices, CZ blamed banks for increasing the risks to stablecoins.
Banks are a risk to fiat-backed stable coins. CZ Binance (@cz_binance) March 12, 2023
Supporting CZs sentiment, a community member pitched the idea of a crypto-backed stablecoin. CZ responded by highlighting the defunct algorithmic stablecoin launched by Do Kwon, saying:Do Kwon actually had the right idea, but just failed miserably on execution.
Moreover, according to CZ, fiat currencies are a risk without adding crypto to the equation.
Fundamentals. CZ Binance (@cz_binance) March 11, 2023
While numerous jurisdictions have sought legal actions against Kwon, the entrepreneur continues to reside in a safe haven unknown to the authorities.
Related: Circles USDC instability causes domino effect on DAI, USDD stablecoins
Many investors foresaw the possibility of USDC depegging and decided to sell their holdings to avoid losses. However, for one such investor, a hasty decision led to a loss of over $2 million for one such investor.
With USDC insolvency fears rampant, users are fleeing to safety in other stables. Not all of them are going to make it there in one piece, however.
Here’s how one unlucky user paid $2,080,468.85 to receive $0.05 of USDT. pic.twitter.com/R8YdudWfsV BowTiedPickle.eth | Solidity Shipper (@BowTiedPickle) March 11, 2023
Instead of selling their USDC holdings in a liquidity pool for 6% slippage, the investor chose a questionable method resulting in a maximal extractable value (MEV) bot netting $2.045 million in profit after paying $45 in gas and $39,000 in MEV bribes. #Altcoin #Banks #Adoption #Fiat Money #Changpeng Zhao #Binance #Stablecoin #Terra
Add reaction
Add reaction Related News How to get a job in the Metaverse and Web3 How and why do stablecoins depeg? Are stablecoins securities? Well, its not so simple, say lawyers Binance mints 50M TrueUSD days after Paxos ordered stop issuing BUSD Binance USD market cap falls below $10B amid rising regulatory concerns
