USDC issuer Circle transfers all funds to Silvergate, first time accepting audit by Deloitte

The issuer of USDC, Circle, stated on the fourth day that it has moved a "small proportion" of reserve funds from Silvergate to other partner banks. Circle mentioned that the gradual unwinding of the partnership began after last year's market turmoil to safeguard the reserve funds.

Circle Reaffirms: Reserves Are Safe

The crypto-friendly bank Silvergate suffered losses due to the FTX user run on funds, leading to a drop in stock prices as it failed to submit financial reports to regulatory authorities on time, becoming a recent hot topic of negative events in the cryptocurrency market. Silvergate is also one of the reserve banks for stablecoin issuers Circle and Paxos, with related parties coming forward to address the remaining exposure.

Circle announced that USDC reserves are held in multiple financially sound U.S. banks, accounting for about 80%. Monthly audits are still conducted by the accounting firm Deloitte, with the first report scheduled for January 2023.

In addition, Circle has discontinued the use of Silvergate's financial network service SEN. According to financial reports, SEN was a significant source of revenue for Silvergate.

First Report by Deloitte

Accounting firms that collaborate with crypto businesses have come under scrutiny in recent years. Exchanges like Binance have faced questions for lacking audits by internationally renowned accounting firms.

In this instance, Circle underwent its first audit by the Big Four accounting firm Deloitte, and the results confirmed the alignment of assets and liabilities.

Where Are Circle's Reserve Banks Located?

As of January 31, 2023, Circle's cash reserves are mostly in U.S. Treasury bonds, held at Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, Flagstar Bank, Signature Bank, Silicon Valley Bank, and Silvergate Bank. This indicates that Circle had funds deposited with Silvergate until the end of January.