The cryptocurrency market has been filled with speculations about the depegging of several stablecoins. Circle’s USDC stablecoin, the world’s second-largest stablecoin by market cap, has displayed a healthy performance during the current bear market. However, rumors on crypto Twitter have claimed that Circle is on the verge of collapsing due to exposure to troubled firms.
The CEO of Circle, Jeremy Allaire, has provided documents showing that the USDC stablecoin has ample liquidity. The CEO posted a long Twitter thread with documents to boost transparency and trust in the company.
Allaire’s post comes after a Twitter user claimed that Circle has suffered billions of dollars in losses after offering major incentives to several banks such as Silvergate and Signature to convert cash deposits into the USDC stablecoin. The user claimed that Circle was exposed to troubled crypto firms such as 3AC, BlockFi, Celsius, and Galaxy Digital.
These claims come amid heightened fear in the market as several firms have faced liquidity issues because of the bear market. 3AC, once a leading investment firm in the crypto space, has filed for bankruptcy. Celsius is also reportedly considering a bankruptcy filing.
USDC is one of the most used cryptocurrencies in the crypto lending markets. Allaire said that some users were confided about the USDC reserves and the USDC stablecoin used in the lending market.
Circle is also seeking investor confidence in the nature of its reserves. The company claims its reserves do not comprise high-risk cryptocurrencies or assets locked up with third parties. Circle is currently planning a direct listing on the New York Stock Exchange (NYSE). The company is working with regulators to make this listing possible.
Tether also dismisses false claims
USDC is not the only stablecoin whose rumors of a possible depeg are making rounds on Twitter. The world’s largest stablecoin, USDT, is also facing similar claims. The CTO of Tether, Paolo Ardoino, recently claimed that the stablecoin was targeted by traditional hedge funds who were shorting the token, hoping that the stablecoin would depeg.
There have been several controversies over USDT’s backing. In May, Tether released a report saying that USDT was fully backed by several assets, including cash and other investments. The Tether CTO further added that after the Terra LUNA crash, Tether had processed around $10 billion in redemptions while sustaining the peg.
