One Panicked USDC Investor Accidently Converted $2 Million to $ 0.05 USDT!

The worst-case scenario for cryptocurrency investors is when a rapid shift in the market conditions triggers widespread panic and a run on the market.

The combined effect of these two events typically results in price fluctuations that cannot be controlled and significant financial losses for investors.

The recent announcement that Circle could not withdraw its $3.3 billion from Silicon Valley Bank illustrates this situation.

In a noteworthy development, the Department of Financial Protection and Innovation in California ordered the closure of the bank.

An unfortunate investor endured significant losses due to a failed deal shortly after the news surfaced, which caused enormous selloffs.


Heavy Loss for Investors in Cryptocurrency

The crypto company Circle made the initial announcement that it had not received a money transfer of $3.3 billion through Silicon Valley Bank.

This was when the problem began. As soon as the announcement was made public, many USDC investors began to panic and withdraw their funds. Consequently, the USDC stablecoin has unpegged itself from the dollar.

Even though some investors were quick enough to trade their USDC for USDT, one investor did not fare as well.

An investor paid $2 million but only received $0.05 USDT, according to a post on Twitter that BowTiedPickle shared.

After conducting extensive research into the subject, BowTiedPickle concluded (1) that the investor had used the KyberSwap aggregation router to convert “a big clip of 3CRV (DAI/USDC/USDT) LP token into USDT.”

The user kept the crypto stablecoin in a liquidity pool, from which he could have obtained USDT with a slippage of 6% had he chosen to sell it. But, as previously mentioned by BowTiedPickle, he opted for a dubious strategy.

Because of the rush, the investor failed to remember to set a slippage, which would have enabled him to determine the price at which his transaction might have been completed successfully.

Because of this, there was a substantial loss of monetary resources brought on by human error.


The USDC Drama

After USDT, USDC is the second most popular stablecoin that can be purchased on the market. At the time of this writing, the USD-pegged stablecoin has been uncoupled from its previous value.

It is presently trading at $0.9169 and has experienced a decline of 13.68% in market cap.

The USDC issue began when Circle disclosed the results of its most recent audit, which showed that as of January 31, 20% of the company’s reserves, totaling $8.6 billion, were distributed across various financial institutions.

These institutions included Silvergate, which failed and caused Silicon Valley Bank to close its doors.

Circle has stated to its customers that it is having problems extracting $3.3 billion of its $40 billion total USDC reserves held in SVB.

This announcement was made, to be honest. In addition, it was disclosed that it joins other SVB creditors and consumers in calling for the continuation of the business.


However, the revelation brought about unfavorable outcomes, as widespread fear caused many investors to pull their money out of the market.

In addition, cryptocurrency exchanges like Coinbase and Binance stopped processing USDC conversions thirty minutes after the announcement, which made the predicament even worse.

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