Circle's CEO: USDC is not struggling, we're doing great
Circle's CEO issued a statement rejecting claims that USDC is struggling economically and emphasising their continued vigour.
Circle - the company behind the second-largest stablecoin by market cap, USDC - reiterated its positive financial position despite a rumor claiming that it was on the brink of collapse. Jeremy Allaire, CEO of Circle, laid out detailed documents on the company's latest status in transparency and trust, audits and attestations as well as on USDC’s liquidity.
The rumor that the company has been bought
Allaire's thread came in response to a running rumor by Twitter user, Geralt Davidson,
In addition, Circle has been exposed to financial risk due to its loans to troubled companies like Genesis, BlockFi, Celsius, Galaxy and 3AC. If billions of USDC that have been lent by Circle are not returned in time, a bank run could occur.
During the market pullback, many crypto lending and borrowing companies fell victim to a liquidity crisis that soon spread across the industry. This caused firms to declare bankruptcy, with USDC being one of the most popular cryptocurrencies used for lending activities.
In order to clear up the misunderstanding about the relationship between reserves and USDC in lending markets, Allaire explained:
5/ It’s understandable why some users would be paranoid given the history of hucksters in crypto. We have always tried to hold ourselves to the highest standards afford to us. That’s enabled us to work with regulators, top-tier assurance firms, and leading FIs.
— Jeremy Allaire (@jerallaire) July 2, 2022
To further support his point, he posted Circle's latest documents on USDC's liquidity issues and its status on transparency and trust. The records indicated that the USDC reserve is held entirely in cash and short maturity US government securities, including Treasury bills with maturities of 3 months or less:
“As of 12:00pm EST Friday, May 13, 2022, the USDC reserve consisted of $11.6 billion cash (22.9%), $39.0 billion U.S. Treasuries (77.1%), for a total of $50.6 billion (100%), and there were 50.6 billion USDC in circulation.”
Circle claims that the USDC reserve does not contain any other high-risk digital assets, assets denominated in currencies other than US dollars, or assets held with third parties subject to lock-ups or other restrictions upon liquidity.
Circle said that it had been following the rules and regulations of regulators while working on its public listing on the New York Stock Exchange. It added that audits of its financial statements for the last two fiscal years, which have already been published, will be included in its SEC filings.
Allaire said that Circle will release a post on Circle Yield, the company's stablecoin-based yield interest rate product, this week. The report will be accessible only to "qualified investors."
