Fallout from the bankruptcy of FTX continues to harm individuals and businesses globally. In recent days, we have communicated with customers, business partners, regulators, and the media about Circle’s strong position despite market turmoil.
Amid the volatility, there has been a flight to quality as market participants – both individuals and businesses – find a safe harbor in USD Coin (USDC). Over the last seven days, the amount of USDC in circulation, as of November 16th, has increased by about $2 billion, or about 4%. There was a similar flight to quality after the collapse of TerraUSD in May, once again underscoring public trust in Circle’s regulated, fully-reserved and transparent approach.
Circle holds ourselves to the highest standards of financial, security, operational and compliance controls as required of U.S. regulated financial institutions, and our risk management, compliance, security and finance teams are comprised of seasoned industry professionals.
USDC Continues Operating as Expected
USDC is always redeemable 1:1 for U.S. dollars – in fact, customers have redeemed $7.7 billion of UDSC in the last seven days. The reserves backing USDC are composed of approximately 80% short duration U.S. Treasuries, custodied with Bank of New York Mellon, and approximately 20% in cash, held among eight strong and trusted banking partners in segregated accounts for the benefit of holders, all entirely separate from Circle’s operations.
Circle is in a Strong Financial Position
In a few days we will file our Q3 2022 financial statements with the SEC, where our audited financial statements dating back to 2019 are available to the public. These financial statements show that Circle is profitable, cash flow positive, and in a healthy financial position.
Minimal Exposure to FTX and Alameda
Given recent events, we have suspended services with FTX and Alameda. In early 2021, we made a $10 million equity investment in FTX – representing only about 0.05% of FTX’s equity. We also made a $0.6m investment in FTX.US.
Minimal Exposure to Genesis
Genesis is a counterparty in Circle Yield, Circle’s fixed-term yield product for institutional investors. Total Circle Yield customer loans outstanding are $2.6 million as of November 17, 2022 and are protected by robust collateral agreements. The outstanding loan balances remain overcollateralized.
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We are unfailingly committed to transparency and subject ourselves to public scrutiny. We are building relationships to continually strengthen our operations, creating new building blocks for business to build on and continue to urge the government to enact laws to protect consumers and support responsible innovation.
This is a difficult time for everyone. Count on Circle to do our part to make blockchain-based financial infrastructure safe, efficient, and inclusive.
To read more of our recent commentary, please visit these links:
