This Danger of USDC could Collapse ALL Crypto.

hey everyone we kevin here could the

cryptocurrency crisis worsen and what

about the world's second largest stable

coin could that become unstable boy oh

boy we've got some crazy findings to

reveal in this video three massive ones

that you're going to want to use not

only as a potential red flag for stable

coins and usdc cryptocurrency but also

all of your investments because my goal

is always to educate you to help you

learn more to not only build your wealth

but protect your wealth especially at a

time when folks take a look at this

we've got sixty percent of investors in

institutions that is surveyed by

bloomberg thinking that bitcoin is more

likely to head to ten thousand dollars

than thirty thousand dollars

so let's see what happens but folks

let's buckle up and get right into these

three red flags just a quick note though

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folks you may have heard of

usdc before it is a stable coin is the

second largest stable coin and it's

created by this company called circle

and the idea of a stablecoin is as long

as it's not algorithmic is that it's

backed by something else usually the

united states dollar so if you have one

usdc it should be worth one dollar and

we generally know that as long as you

hold it in usdc and you don't lend it

out you should have the right to that

one dollar if you lend it out then the

person you've lent it to has the right

to that dollar but in exchange you get a

yield okay we understand how that works

but what's happening and why could a

change in yields be one of the first red

flags and where are the actual reserves

for usdc

it might not be what you think that's

kind of scary but let's take a look at

this because we've done some discovery

here first we could use the wayback

machine to see that cryptocurrency

yields by a circle for usdc have been

plummeting here they are at six and a

half percent march 9th

march 23rd they went to 5.5

then they went down to 4.6 percent just

six weeks later followed by another six

weeks later a plummet to one percent

yields and now folks

you're only getting half of a percent on

your usdc so all of a sudden yields have

plummeted in just four months from over

six and a half percent to just half of

one percent now circle makes an argument

for this and they make the following

statement here

they tell us that during unprecedented

times that we're going through in the

digital assets marketplace circle yield

has performed as designed all borrower

margin calls have been met and circle

yield remains over collateralized okay

hold on a second because this is really

important

because we heard that

loans are over collateralized at voyager

digital and block fi as well but then

three eros capital which is a hedge fund

or was hedge fund with 18 billion

dollars under management decided to go

bankrupt disappear and not provide any

liquidity to the margin calls that were

made by companies like voyager digital

who now is filing for chapter 13

bankruptcy and block fi who's had their

valuation slashed by around 90

which is insane so all of a sudden you

kind of lose faith in this hope that oh

yeah don't worry margin calls will save

you in the crypto industry yeah no it

doesn't need to but not only that over

collateralization is such a stupid word

because if you think about it if you

have a hundred thousand dollars and a

bank lends you eighty thousand dollars

technically that's over collateralized

because your collateral is greater than

the loan well the same is true in real

estate you buy a hundred thousand dollar

house you put twenty percent down what

happens oh yeah you're over

collateralized well that really helped a

lot in 2008 in the recession and the

financial crisis over collateralization

is just a marketing ploy pitch but

anyway

circle so far says that neither circle

nor other customers have increasingly

losses but as borrowing demand has

fallen along with the turmoil in the

assets markets our rates for new loans

have followed

this folks is a little bit of a red flag

number one now we're going to talk about

red flag number two which is even more

wild but red flag number one

is basically telling us the following

hey

circle

who usually takes your money your one

dollar and in exchange gives you a usdc

says that hey if you want to lend out

your usdc and you give that back to us

we can now lend that to institutional

investors those institutional investors

might get charged let's say

eight percent for a loan and uh will

take two percent of that as a profit and

will give you say six percent as a yield

right that's generally how these sort of

yield farms work

but what happens if institutions stop

borrowing and they say hey we'll only

pay you one percent and circle says fine

we'll take half percent that means we

can only pay half percent to you that

means for some reason there's a lot less

institutional borrowing of usdc

happening in this space and for me this

is a little bit of a red flag that maybe

institutions are saying oh my gosh what

if usdc is next and so this led me to

look at the reserves for usdc the first

thing i wanted to do was to get a better

understanding of the reserves by hopping

over to their sec filings which i'm just

going to give you the bottom line on

these because as usual filings get a

little boring so one of the things

that's very interesting though that we

see the filings is the following we

actually see them mention here that if

institutions default we could see a

stress in markets leading to significant

liquidity problems and losses or

defaults by other institutions

potentially leading to the risk of loss

especially since they mentioned here

that usdc is not fdic insured and is

subject to risk of loss

they also mention that their reserve

management policy is to put money into

cash and short-term u.s government

treasuries which that sounds really good

cash and u.s treasuries are generally

deemed risk-free right

but when you actually look at state

transmitter laws cash equivalents which

is what you mention over here usdc

tokens issued and outstanding are backed

by an equivalent amount of u.s dollar

dem denominated assets

held in relation to permissible

investments of reserves we look at that

and we look at what permissible

investment reserves could be we can

actually see things like cash and

certificates of deposits high grade

bonds but look at this down here

you could also have a permissible

investment that's considered a cash

equivalent

right here in virtual currency

and then it really got me thinking to

myself oh my gosh what if when they say

cash and cash equivalents so cash and

cash eqs which they say are mostly

treasuries

well what if they're actually counting

in cash

other

crypto and so that's a little bit of a

red flag because when we think of cash

we literally think of the dollar

but if reserves are potentially being

held another crypto then as and that's a

permissible investment via some

loopholes of that money being in

transmission

then we can have a lot of reserves of

usdc actually tied up in cryptocurrency

now when somebody from zerohedge a

reporter over at zerohedge investigated

this as well and they confronted

circle circle responded and said the

following as we have shared publicly the

cash portion of the reserve is held with

a number of banking partners so this is

that cash portion i was talking to you

about they mentioned it's held with a

number of banking partners including

silvergate bank signature bank and the

new york community bank

now what's fascinating about this is at

first we hear banks and we think okay

that sounds good

banks you know those must be safe right

but wait a minute what's this one right

here the first one they mentioned

including

silver gate bank

well folks when you go check out

silvergate bank you get a beautiful

entrepreneurial website the silvergate

banking platform is an innovative

or is as innovative as the entrepreneur

we serve ah really okay tell us more

about this

okay we work with innovators in digital

currency and fintech

all right so you do crypto stuff great

oh what's this

maximize access to capital

okay

sen

leverage provides secure

institutional grade access to capital

through us dollar loans collateralized

by bitcoin we create custom lending

solutions and we work with regulated

established custodians to ensure that

your collateral will never be

rehypothecated okay

wait wait a minute wait a minute usdc

says their money is backed up by cash

and cash equivalents

and so all of a sudden kevin here is

saying that cash equivalents could

potentially be

crypto

which isn't the dollar right so that's

risky

but on top of that

the money the cash portion is being held

at a bank

called silvergate which potentially lets

you borrow against your deposits

but then it wouldn't be a reserve

anymore right i mean the money's

supposed to be in custody at least we're

told that our cryptocurrency uh deposits

or our usdc reserve is being custodied

right

well

take a look at this when you jump on

over to the next section

of the silvergate bank website what do

you get

institutional custody as a federally

regulated bank that's been serving

institutional investors in digital

assets since 2013 were well suited to be

your qualified custodian

our custody solution was built tested

and audited by industry pioneers okay

whatever

safeguard and store your bitcoin and

other digital assets like usdc in

segregated cold storage accounts a

proprietary approach

what's this

plus

our team's industry expertise ensures

you have access to institutional

solutions

including the silvergate exchange

network that allows you to efficiently

execute your straight trade strategies

but

remember what the silvergate exchange

network was

it was an opportunity to get access to

lending

and so what's fascinating here is really

what could be happening

is that when we deposit one dollar into

usdc

they could literally tell us to our face

hey don't worry we keep all of it in

cash and cash equivalents and these

might be treasury bonds right here

but they could literally be blowing

smoke misleading us

because cash

could actually be

crypto that's in transition or

it could be

the money usdc that's deposited with

silvergate and then through the

silvergate exchange network is allowed

to be leveraged

uh and lent against basically to get

loans on and now all of a sudden those

loans could be invested to try to make

more money for circle but that then of

course puts at risk of the underlying

asset which would be the usd backing

cash so if whatever they're investing in

goes bad then this cash level could be

reduced substantially now look i want to

be clear that we're speculating pieces

of the puzzle together here because we

don't actually have the answers as to

where the money is where are the

reserves we don't know but what we do

know is companies like coined

coinbase told us that our money is not

protected in bankruptcy when it's

deposited with coinbase remember not

your keys not your crypto and the reason

i'm mentioning that is because coinbase

and usdc have a partnership via what's

known as the center consortium which is

owned by coinbase and

circle and this sets up the

infrastructure for usdc

so if you thought you were safe from

coinbase and their bankruptcy

disclaimers with usdc

oops they're actually in a partnership

together and so then this brings up

the big

circle of circle which i want to show

you right after i show this comment from

a user in discord we had a chat going on

and uh rowdy rick mentioned that

seven hundred dollars for a lifetime

when people spend 30 to 40 thousand

dollars per year from school that

doesn't even teach you shite

is a bargain is essentially what uh

rowdy rick is saying a rowdy rick a

course member shouting out the courses

on building your wealth link down below

check them out you can get 50 off and

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access to these education courses where

i continue to add content to them we go

live and do fundamental analysis

together we do real estate analysis

together if you're not part of the

programs yet you really should be check

them out this chart here nicely puts

together what could be happening with

circle which is when we deposit money

circle can then take that money giving

us usdc

and end up sending it to the banks which

lend you against that collateral this is

what we explained which that money could

then be recycled into the process

lent out again especially to higher risk

lenders whether that's celsius or block

fi or 3ac or whatever and the process

gets repeated while at the same time

circle loses money and just conducts

more money raises to try to remain

solvent in fact if you look at their

statement of cash flows here you'll see

exactly that last year they lost

508

million

dollars

for a company that's sending you high

yields they lost 508

million dollars well hey maybe you could

just sue them if something went wrong

right after all they're a limited

company that has an office listed here

in boston massachusetts right well it

depends which company or entity you

actually would need to file a suit

against see here you've got circle

limited company but then over here

crypto yield by circle is actually a

product offered through

circle international bermuda aka circle

bermuda so in other words they have

another entity for their yield division

so then who actually has the money if

circle bermuda is doing crypto yield

who's holding the reserves

where are the reserves

and if the reserves

are there

why not disclose exactly where the

reserves are

and if you're not willing to disclose

where the reserves are

which you're not other than just

publicly stating this then i guess you

can't really blame us for feeling

skeptical about usdc now some people say

hey don't worry usdc is safe because

ultimately if blackrock is willing to

invest in usdc well then it's good

enough for me and sure blackrock did

lead a 400 million dollar funding round

that included some investments from

blackrock and fidelity but it doesn't

mean they contributed the entire 400

million but what it does mean or at

least what we think it means is usually

when we see partnerships things go both

ways and what's fascinating is jump back

over here and what do you notice the u.s

treasury bills are purchased by

blackrock and are held in custody with

bny melon so oftentimes there are more

financial relationships than what we see

at the surface this is not necessarily

blackrock just saying let's put money in

a circle because we think it's a great

business

it's probably a profitable reason they

are investing into circle and it might

have nothing nothing at all to do with

the strength of usdc which quite frankly

i don't know if even blackrock knows

where these reserves and all of those

reserves actually are but then again if

they can invest let's just say just to

show you how we could go hey blackrock

invested 20 million dollars wow you guys

must be safe that builds confidence

great but if blackrock is getting

financial benefits that exceed let's say

50 million dollars over every two years

or whatever that 20 million dollars gets

paid back pretty quickly circle gets to

maintain this sort of reputable

appearance because they have a

relationship with blackrock who's deemed

to be smart blackrock is smart because

they're actually making more money but

if circle ends up going bankrupt because

the reserves were invested in in a crazy

way and the reason their reserves

weren't transparent is because they

didn't want people to know how their

reserves actually were invested well

folks then what do you have you have

yourself a big old problem and if usdc

goes bye-bye

a lot of trust in the crypto ecosystem

could be lost so just be warned that

this sort of stuff raises red flags in

my opinion so what's my take on all of

this well my take is i would own no

usdc in a declining market would i

consider it in a market that's going up

which is generally when yields are going

to be higher anyway

yeah because i think the odds of

systemic risks in a market that is going

up are actually very very low

but in a declining market the odds of us

having real risks and real bankruptcies

that end up shocking us in areas that we

don't even

think of

are very very high and so this is where

even with usdc

i personally would stay away from stable

coins until the recession that we're

either going through or about to go

through is over and we actually see a

more consistent move up in markets

and let before this happens because

we're not in the consistent up yet let

whatever disaster needs to happen happen

but i don't want to be a part of it

because if we have that kind of drop

usdc and whatever you've got in usdc

might not be safe so personally not your

keys not your crypto if i was going to

own crypto i'd get it off exchange but i

wouldn't even keep a penny in usdc in

this market

my take

my opinion i could be totally wrong and

maybe they do have everything in cash

and cash equivalents but you should have

learned in this video that even those

definitions raise some doubt