Jeremy Allaire disputes claims. Circle is on the verge of going bankrupt.
On July 2, Circle CEO Jeremy Allaire published a thread on Twitter in response to unsubstantiated claims that Circle is struggling in the current market environment. Allaire refuted the allegations by claiming that Circle is in the “strongest financial position it has ever been in.” Allaire said he applauded the decision to establish strict new regulations for stablecoin issuers in the latest MiCA framework and said that it will boost much-needed customer trust in “issuers like Circle.”
FUD around Circle has grown recently. Anthony Sassano, the creator of the Daily Gwei newsletter, for instance, said on June 18 that Circle may freeze USDC “at any address at any moment for whatever reason.”Allaire referred viewers to a blog post from May 2022, which effectively revealed that genuine users had nothing to worry, in order to refute Sassano’s accusations as untrue and useless FUD. Now, in response to more recent claims that there are problems at Circle, Allaire uploaded a number of links to blog postings discussing difficulties with transparency, audits, and liquidity. Given the history of con artists in the cryptocurrency industry, Allaire said he can see why some people may feel worried. He did, however, reassure users that Circle adheres to the strictest standards.
The development of unsubstantiated assertions that Circle is “at great risk” of defaulting served as the catalyst for Allaire’s Twitter thread. Based on Circle’s SPAC IPO papers, Twitter user @CryptoInsider23 asserted that “something dirtier [is] occurring below.” Circle’s incentives mechanism, according to claims made by @CryptoInsider23, results in losses that are covered by capital raising. Moreover, the business is “on course to lose 1.5 billion in 2022.” It is also said that client USDC deposits are managed similarly to how banks do fractional reserve banking and are leased out via an offshore Bermuda-based company in order to circumvent U.S. regulatory oversight. In response, Allaire asserted that Circle is over-collateralized and that USDC is only lent to qualified investors (presumably via official means). He stated in his post’s conclusion that the company had “zero concerns.”
