USDC Holders Fork Over $2M in USDT at $0.05 to Flee Crypto Crash

Every cryptocurrency investor’s nightmare begins when sudden changes in the industry lead to panic and massive sell-offs. The effects of these two situations often lead to uncontrollable price declines and huge losses for investors.

An example of such an event was the news that Circle was unable to withdraw $3.3 billion from Silicon Valley Bank. Notably, the bank was shut down by the California Department of Financial Protection and Innovation.

Following the news, a massive sell-off ensued, causing hapless investors to lose heavily in failed trades.

Huge losses for cryptocurrency investors

The problems started when cryptocurrency company Circle announced that it had not received a $3.3 billion wire transfer from Silicon Valley Bank. As soon as the announcement came out, many USDC investors panicked and began to withdraw their funds. As a result, the USDC stablecoin is depegged from the US dollar.

While some investors were quick enough to swap their USDC for USDT, investors were not so lucky. In a Twitter thread shared by BowTiedPickle, the investor paid $2 million but received $0.05 in USDT.

USDC Holders Fork Over $2M in USDT at $0.05 to Flee Crypto Market Crash

After digging into the matter, BowTiedPickle found that investors used the KyberSwap aggregation router to dump “a large sum of 3CRV (DAI/USDC/USDT) LP tokens into USDT.” A user stored a cryptocurrency stablecoin in a liquidity pool, which he could have sold for USDT with a 6% slippage. But as BowTiedPickle disclosed above, he chose a shady approach.

In his rush, the investor forgot to set the slippage that would have allowed him to set the price for the trade. This was caused by human error and resulted in permanent loss of funds.

Introduction to USDC Saga

USDC is the second largest stablecoin in the market after USDT. At the time of writing, the stablecoin has lost its peg to the U.S. dollar. It is currently priced at $0.9169, a drop of 13.68% in market cap.

The USDC issue started when Circle shared the results of its latest audit, disclosing that as of Jan. 31, 20% of its reserves, or $8.6 billion, were held at various financial institutions, including Silvergate, which led to the collapse of Silicon Valley Bank.

In an effort to be transparent to customers, Circle announced that it was having difficulty withdrawing $3.3 billion of its $40 billion USDC reserves at SVB. It also revealed that it joins other SVB depositors and customers in calling for its continuity.

Unfortunately, the announcement had negative consequences as panic set in, causing many investors to exit. Additionally, cryptocurrency exchanges such as Coinbase and Binance suspended USDC conversions 30 minutes after the announcement, further exacerbating the situation.

Featured image from Pixabay and chart from

Information source: compiled by 0x information from BITCOININSIDER.The copyright belongs to the author Anonymous, and shall not be reproduced without permission

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