Circle – the company behind the second-largest stablecoin by market cap, USDC – reiterated its positive financial position amid rumors calling the company on the verge of collapse. As the report went viral, CEO Jeremy Allaire laid out detailed documents on the company’s latest position on transparency and trust, audit and verification, as well as USDC’s liquidity position.
refute the rumor
allaires twitter thread A Twitter user, Geralt Davidson came up with a response to the rumor going on, claiming that Circle has lost billions of dollars over the years as it has given crypto-oriented banks such as Signature and Silvergate high incentives to convert their cash deposits into USDC.
In addition, with exposure to troubled companies such as USDC Lending, Genesis, BlockFi, Celsius, Galaxy and 3AC, Circle runs the risk of running a bank because billions of USDC will not be returned on time, Davidson said.
During violent market volatility, many crypto lending and borrowing companies have fallen victim to a liquidity crisis that soon spread across the industry, leading to companies claiming bankruptcy. It is worth noting that USDC is one of the most popular cryptocurrencies used for lending activities.
In response, Allaire clarified confusion regarding the relationship between the reserves and USDC used in the lending markets:
5/ It’s understandable why some users would be paranoid given the history of hackers in crypto. We have always tried to hold ourselves to the highest standards. This has enabled us to work with regulators, top tier assurance firms and leading financial institutions.
— Jeremy Allaire (@jerallaire) 2 July 2022
To further support his point, he posted Circle’s latest documents on USDC’s liquidity matters and its position on transparency and trust. The record noted that USDC reserves are held entirely in cash and short-dated U.S. government obligations, including U.S. Treasuries with maturities of 3 months or less:
“As of 12:00 p.m. EST Friday, May 13, 2022, USDC reserves consisted of $11.6 billion in cash (22.9%), $39.0 billion in US Treasuries (77.1%) for a total of $50.6 billion (100%), and there Were 50.6 billion USDC in circulation.”
According to Circle, USDC reserves do not hold any other high-risk digital assets, assets denominated in currencies other than the US dollar, or assets held by third parties subject to lock-ups or other restrictions on liquidity.
For a public listing on the New York Stock Exchange, Circle said it has worked closely in compliance with regulators, and will include its last two published annual audits as part of its SEC filings.
Allaire said Circle will share a blog post this week on Circle Yield — the company’s yield interest rate product built entirely on the USDC stablecoin — providing more transparency about its regulatory status and more collateral. However, the report will only be available to “accredited investors”.
A similar reaction from Tether
As a major rival to USDC, Tether’s stablecoin USDT was reportedly targeted by hedge funds following the failure of Luna-UST due to controversies surrounding the transparency of Tether’s assets in reserves.
In May, Tether published a report confirming that its stablecoin is fully backed with cash, liquid assets, and other investments. The company’s CTO responded by calling the move a “coordinated attack”, adding that selling short USDT would eventually have to buy back the stablecoin.
PrimeXBT Special Offer: Use this link to register and enter code POTATO50 to get up to $7,000 on your deposit.