Everyone we kevin here could the cryptocurrency crisis. Worsen and what about the world's's second largest stable coin could that become unstable boy. Oh boy. We've got 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 this video is brought to you by streamyard go to medkevincom.

Streamyard to learn more about professional live streaming software where you can throw comments up on stream and multi platform stream all at the same time go to metkevincom streaming to learn more now 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. 55 then they went down to 46. 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. Us government treasuries which that sounds really good cash and us 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 us 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 remember that you're getting lifetime 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 us 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.