Circle CEO Denies Rumors Of USDC Collapse: Report

The Circle CEO denies rumors of a USDC collapse saying that the company is actually in the best financial position ever so let’s have a closer look at today’s cryptocurrency news.

Circle is the company behind the second biggest stablecoin by market cap USDC which reiterated its positive financial position amid the rumors calling the company an almost bankrupt company. The reports went viral but Jeremy Allaire, as the Circle CEO denies rumors of a company collapse and laid out documents of the latest status of the company as well as audits, trusts, and attestations. Allaire’s Twitter thread came in as a response to the running rumors by one user Geralt Davidson who claimed Circle lost billions of dollars over the years and injected high incentives for crypto banks like Silvergate and Signature to convert cash deposits into USDC.

4/ On Liquidity. https://t.co/NXM5pdObxm

— Jeremy Allaire (@jerallaire) July 2, 2022

USDC lendings were exposed to troubled companies such as Celsius, Galaxy, BlockFi, Genesis, and 3AC which all caused Circle a risk of a bank run with billions of USDC not being returned in time. During the violent market pullback, most lending and borrowing companies fell prey to the liquidity crisis which spread across the industry like wildfire and caused companies to claim insolvencies. It is worth noting that USDC is one of the most popular crypto assets used for lending activities but Allaire did clarify there was confusion about the relationship between SUDC and reserves that are used in the lending markets.

To back up his point, he posted Circle’s documents on USDC liquidity matters and the status of transparency and trust. The records noted that the USDC reserve is held in cash and short-dated US government obligations which consist of US treasuries:

“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.”

According to Circle, the USDC reserve doesn’t contain other high-risk digital assets or assets in denominated currencies rather than the US dollar. Looking for a public listing on New York Stock Exchange, Circle added that it worked closely with regulations and the annual audits will also be included as a part of the SEC filings. Allaire added that Circle will share a blog post this week and show that the yield interest rate product built on the USDC stablecoin provides more transparency about the regulatory status.

Tether’s stablecoin on the other hand was targeted by hedge funds after the LUNA-UST fiasco because of the many controversies around the transparency of assets in reserves. Tether also issued a report confirming that the stablecoin is fully backed with liquid assets, cash, and other investments. The company CTO responded by calling this move a coordinated attack and added that these short-selling USDT will have to buy back the stablecoin.