Chose to exceed that and also not diversify at the same time. In my mind they have only themselves to blame. They could have gotten one or two more accounts if they are legitimate businesses.

What if you have 3 billions to deposit, like Circle ? Open 1200 accounts in 1200 different banks ?

If you have 3 billion deposits, why not have let's say 3 different accounts with billion each? They don't cost that much money. And then even if one bank has system failure preventing transactions, you could have two others working. Or even some reasonable amount like one with each top 10 in users. With some amount of money in each allowing customers even better interaction.

You want to play at a risky bank, you get to pay for risky insurance.

Is your goal to eliminate risk, or to mitigate it?

If they had deposited that 3B in, say two banks rather than one, they'd have 1.5B in that other bank

They actually had like $12B split across 5 or 6 banks. But yeah, they definitely could've split it better. "No more than $1B per bank" seems like an easy rule, and even maxing at $500M could be doable.

Just buy us treasuries. There is no rule that you have to have cash at a bank.

They did have ~77% of collateral in T-bills. I do wonder why that wasn't even higher though.

Open 4 banks and you’ll lose at most 25%?

Use treasures bills if you’re that concerned.

They did use mostly T-bills, and spread out the cash over 6 banks - that's why it's "only" $3.3bn out of $42bn.

I mean then you accept that banks aren’t risk free? I’m not sure why people have been under the assumption they are.

Let's not act like Circle's options were either to put 3 billion in one bank, or open 1200 accounts at 1200 banks.

-Purchase high-limit cash insurance from a Reinsurer like Lloyds of London or Berkshire Hathaway up to their underwriting limit, perhaps $100M. Do this across 4-5 different banks with 4-5 different reinsurers.

-Put the remaining $2-2.5B into mixed US Treasuries of varying maturities

They did already have 77% of the collateral in short-term T-bills, and the 23% in cash was spread out across multiple banks. They held $3.3bn at SVB, but that's out of $42bn total.

So then it sounds like they probably had 10-15 banks (entirely reasonable for them to be expected to open this many accounts at unique banks, given their business model) which is a far cry from the 1200 OP complained about.

If your entire business model revolves around moving multiple billions of dollars via an asset-backed stablecoin model, it's reasonable to expect you to have dozens of bank accounts, in at least 3 time zones, and likely more.

I don't know why people (not saying you specifically) seem to have this expectation any entity should be able to deposit billions of dollars risk-free at a single institution. The same people who intuitively grasp the value of having crypto distributed amongst multiple wallets rather than all in one, somehow can't grasp infinite $ cannot be deposited at a bank without risk.

If you're leaving 7 to 9+ figures in a single account, then either buy insurance, or only do business with banks which offer excess insurance.

I'm not sure any private insurance exists that can cover a $42m deposit?

It does. In the context of the financial services and reinsurance industries, $42 million is not an enormous amount of money.

Sorry I meant $42b, which is the amount of USDC collateral held by Circle.

You can buy specific insurance in case of bank defaults. That's what large businesses do on the regular, it is not a new or strange thing

People here simply decided to not inform themselves or seek appropriate assistance and therefore got bitten

two accounts at two different banks already decreases the expected loss by 45% or so. (not 50%, because of contagion)

Were they gambling by putting their money in an FDIC insured bank?

How do you even run a payroll system if your money is spread out between a dozen banks?

You use the various services that exist to do this? Or you just have enough money in your payroll source account?