In theory, this is related to their recent automated BUSD <-> USDC conversion program. They started treating the two as fungible, and so have split reserves bet

In theory, this is related to their recent automated BUSD <-> USDC conversion program. They started treating the two as fungible, and so have split reserves between the two (likely BUSD for the most part). If your reserves of USDC get drained faster than you can replenish, then you can't withdraw more USDC (even though it's backed since you have a BUSD waiting to convert). Such a system runs along just fine, until suddenly there's huge USDC withdrawal pressure over the weekend, you can't get dollars from the bank BUSD uses to the bank USDC uses, and the USDC reserve goes empty. Wait for banks to get back into business and everything is super fine. From the outside the above situation and a true insolvency look quite similar. It should be possible to inspect their BUSD balances on chain though?