Circle CEO Jeremy Allaire on July 2 posted a Twitter thread responding to unfounded allegations that Circle is floundering amid the challenging market conditions.
In debunking the claims, Allaire said Circle is in the “strongest position it has ever been in financially.” Commenting on the recent MiCA framework, in which EU lawmakers agreed to implement rigid new rules for stablecoin issuers, Allaire said he welcomed the move, adding that it will provide much-needed consumer confidence in “issuers like Circle.”
8/ Circle is in the strongest position it has ever been in financially, and we will continue to increase our transparency. FWIW, we are also encouraged by emerging regulatory frameworks for stablecoin issuers, which should help further increase confidence in issuers like Circle.
— Jeremy Allaire (@jerallaire) July 2, 2022
Circle boss addresses allegations
Recently, FUD surrounding Circle has been mounting. For example, on June 18, the founder of the Daily Gwei newsletter, Anthony Sassano, said Circle can freeze USDC “in any address at any time for whatever reason.”
Allaire said Sassano’s claims were inaccurate and unhelpful FUD, referring observers to a blog post dated May 2022, which essentially disclosed that legitimate users have nothing to fear.
Fast forward to now, and in addressing fresh allegations that all is not well at Circle, Allaire posted a series of links to blog posts addressing issues to do with transparency, audits, and liquidity.
Allaire said he understands that some may feel paranoid “given the history of hucksters in crypto.” But he assured users that Circle holds itself to the highest standards.
Allaire says we have zero issues
The spark for Allaire’s tweet thread was the emergence of unfounded claims that Circle is “at major risk” of defaulting.
Twitter user @CryptoInsider23 made the claims based on Circle’s SPAC IPO filings, concluding that “something dirtier [is] happening underneath.”
Circle's USDC scheme is on the brink of collapse. If you read their SPAC IPO filings its clear they have been losing money constantly but theres something dirtier happening underneath. They're at major risk on defaulting on USDC reserves. A deep dive
on USDC.
pic.twitter.com/GgN5oeD7gO
— Geralt Davidson (@CryptoInsider23) June 29, 2022
@CryptoInsider23 alleged that Circle’s incentives model leads to losses, which are paid for by capital raises. And that the company is “on track to lose 1.5B in 2022.”
It’s also alleged that users’ USDC deposits are handled similar to how banks do fractional reserve banking and lent out via an offshore Bermuda-based company, to escape U.S. regulatory oversight.
In response, Allaire said Circle is over-collateralized and USDC is only lent to accredited investors, (presumably via official means). He signed off the tweet saying the company has “zero issues.”
7/ On the last point re: Circle Yield, we will share a blog post this week, but the essence is that because Circle Yield is regulated, over-collateralized, offered as a security to only accredited investors, and has a very conservative UW approach, we have had zero issues.
— Jeremy Allaire (@jerallaire) July 2, 2022
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