Crypto exchange Gemini had no funds at Signature Bank, and its Gemini US Dollar (GUSD) stablecoin was not backed by any deposits at the failed bank, according to a March 13 official tweet from the company.
1/ It’s very sad to hear the news about Signature Bank. They have been incredible partners to Gemini and our industry for the better part of a decade.
We have zero customer funds and zero Gemini dollar (GUSD) funds held at Signature Bank.
— Gemini (@Gemini) March 13, 2023
The exchange further clarified that it had partnered with Signature in the past, stating, “They [Signature] have been incredible partners to Gemini and our industry for the better part of a decade.” However, all current reserves are held at only three United Stat banks — State Street Bank, Goldman Sachs and Fidelity — Gemini said.
The company also stated that it is actively monitoring bank counterparty risk to ensure that customer funds and GUSD backing are not impacted.
On March 13, Circle’s USD Coin (USDC) lost its peg in the secondary market due to fallout from the Silicon Valley Bank collapse, leading to speculation that GUSD and other stablecoins may also lose their pegs. USDC regained its peg on March 13.
Gemini emphasized that each GUSD coin is backed by dollar reserves, stating:
“As a reminder, Gemini is a full-reserve exchange and custodian. This means that all customer funds and Gemini dollar reserves are held 1:1 on Gemini and are available for withdrawal at any time.”
The collapse of Signature was part of a series of bank failures that swept the U.S. in early March. Silvergate Bank agreed to “voluntarily liquidate” on March 8, followed by Silicon Valley Bank being shut down on March 10.
Image Source: PL Gould / Shutterstock