314M USDC sent to null address as redemptions begin: Report

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According to Web3 analytics platform Watchers, a total of 314.167 million USD Coin (USDC) was sent by its issuer, Circle, to the Ethereum null address with header 0x00 on March 13. The null address is typically used to remove tokens from circulation via one-way transactions.

On March 12, Circle announced that following a joint announcement by U.S. Treasury Secretary Janet Yellen and other regulators, all depositors with Silicon Valley Bank (SVB) — representing $3.3 billion, or 8% of the total USDC reserve — would be “fully available,” when U.S. banks opened on March 13. Jeremy Allaire, co-founder and CEO of Circle, commented:

“Trust, safety and 1:1 redeemability of all USDC in circulation is of paramount importance to Circle, even in the face of bank contagion affecting crypto markets. We are heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the banking system.”

USD Coin was designed to be 1:1 redeemable with U.S. dollars, and its tokenomics are dictated by fiat collaterals in proportion with new token minting and burning. On March 10, the token depegged after Circle’s custodian bank, SVB, suffered a bank run after a series of failed leveraged long positions on the U.S. Treasury, forcing federal regulators, including the Federal Deposit Insurance Corporation, to intervene.

At the time of publication, USDC was trading at $0.9958, compared with a historic low of $0.87 two days prior. Circle has stated that in the event of a shortfall, it will use corporate funds and external capital, if necessary, to defend USDC. Some crypto whales reportedly sold USDC at the bottom during the depegging event, causing heavy losses.