Market rumors that USDC is “in trouble”!Listen to how the CEO of Circle is domineering to refute rumors – Programmer Sought

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Market rumors that USDC is “in trouble”!Listen to how the CEO of Circle is domineering to refute rumors – Programmer Sought
Blockonomics



In a bear market, as the prices of various tokens begin to plummet, many investors will convert some of their crypto assets into stablecoins in order to survive this difficult crypto bear market with smaller losses. However, with the intensification of market turmoil recently, USDC, the stable currency that has been shining a while ago, has also fallen into a storm of public opinion.

Rumors about USDC in trouble

At the end of June, cryptocurrency trader Geralt Davidson published a long thread about USDC’s troubles, and the main content of the thread was two points:

1. According to an analysis by Geralt Davidson, USDC issuer Circle has already lost $500 million in the first quarter of 2022, and may lose a total of $1.5 billion during the year. In addition, Geralt Davidson said that Circle has also been paying a high interest rate of 5% to an unnamed bank, which may be why Circle has been raising capital over the past few years. Notably, Circle’s USDC reserves were lent out by the unnamed bank, making Circle’s business even more strained. Circle also allegedly used an offshore company in Bermuda to facilitate USDC loans to avoid U.S. control and disclosure.

2. Geralt Davidson said that there is a shady part of Circle, which is that USDC has contacted several cryptocurrency companies that are currently facing financial difficulties. USDC is now purportedly lending to high-risk lenders, with clients including Genesis, BlockFi, Celsius, Galaxy, Alameda, and Three Arrows Capital.

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As the thread went viral, rumors within the cryptocurrency community that USDC was on the verge of collapse started to intensify.

Circle CEO’s response to rumors

In the face of so much skepticism, Circle founder and CEO Jeremy Allaire tweeted a series of statements and posted an article he wrote in May about transparency and trust in USDC. Here’s what collates the Circle CEO article:

Since its inception, Circle has been committed to making USDC the most transparent and trusted USD stablecoin, and will continue to work on transparency and trust in the future, and will continue to enhance reporting and disclosure through simple, clear, and frequent updates. Here are some facts about USDC:

USDC is fully supported

USDC has always been backed by an equivalent dollar-denominated asset. USDC reserves are managed and held by major U.S. financial institutions, including BlackRock and Bank of New York Mellon. Additionally, USDC reserves are held entirely in cash and short-term U.S. government bonds, including U.S. Treasuries with maturities of 3 months or less.

As of May 13, 2022, USDC reserves consisted of $11.6 billion in cash (22.9%), $39 billion in Treasury securities (77.1%), totaling $50.6 billion (100%), and $50.6 billion in circulation.

It is worth mentioning that since its launch in September 2018, Circle has published monthly certifications from a leading global accounting firm proving that USDC reserves are worth at least as much as the amount of USDC in circulation, providing the USDC ecosystem with A reputable third-party guarantee. Additionally, USDC’s issuer, Circle, is audited annually, including the USDC Reserve, and the last two audits for 2020 and 2021 have been released as part of Circle’s filings with the SEC as we prepare to list on the NYSE .

Finally, the issuance of USDC is regulated in accordance with U.S. state money transmission regulations, and Circle and its operations are subject to ongoing scrutiny.

USDC is always 1:1 to USD

Circle customers can always mint or redeem USDC on a 1:1-to-USD basis through their Circle accounts, and customers can mint and redeem almost immediately after funds are settled. In addition, individual users can exchange USDC for USD globally through digital asset exchanges such as Binance, Coinbase and FTX.

To provide greater transparency and trust, Circle will provide weekly and daily reports on minting and redemption activity going forward. In 2021, Circle minted $99.3 billion and redeemed $61.1 billion, and in the past 7 days, Circle minted $8.4 billion and redeemed $6.7 billion.

Currently, USDC is supported by thousands of projects and exchanges in more than 190 countries, making it easy for market participants to use and exchange USDC. As of May 13, the 24-hour USD trading volume was $10.5 billion.

According to the information disclosed by Allaire, Circle’s data is normal. Although there is a slight loss, it is not a loss of 500 million US dollars as rumored. Of course, the rumor of a loss of 1.5 billion US dollars at the end of the year is even more credible.

In addition, we can also see from the above that Circle attaches great importance to its own transparency and trust. In response to the rumor that the USDC stablecoin is on the verge of collapse, Allaire directly stated:

Circle has always tried to hold itself to the highest standard it can afford, so that Circle works with regulators, top insurers and leading financial institutions, Circle is financially the strongest it has ever been and will continue to improve transparency.

write at the end

At present, the upward momentum of Circle is very strong, and even surpasses Tether (USDT), and it is currently preparing to be listed, so it must be very cautious in terms of risk control. In addition, the regulatory issues of stablecoins are currently under strict supervision, and Circle has always maintained a cautious and compliant attitude. It can be seen that the previous rumors are indeed unbelievable.

Of course, whether Circle is affected by Genesis should also be disclosed, but even if there is a certain impact, Circle will not come to the point of collapse. After all, in a world where $20 billion worth of stablecoins (UST) disappear overnight and all other digital asset holders lose their value substantially, the issuer of the stablecoin itself is the beneficiary.

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