Circle Performs Low Due Binance’s Auto Conversion of USDC

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Unfortunately, the impact of the recent series of unfortunate events in the crypto space continues to be felt across the industry. 

According to a recent S-4 filing, stablecoin issuer Circle performed lower than its earlier projections in February due to the sudden collapse of FTX and Binance’s decision to auto-convert USDC to its own stablecoin. 

Interestingly, Circle first made the S-4 filing with US Securities and Exchange back in August 2021 when it planned to go public via a merger with Concord Acquisition Corp at a $4.5 billion valuation at the time.

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Level of Circle’s Exposure to Fallen FTX

Prior to the fall of FTX, the exchange was a client of Circle’s payment API, Circle also provided payment processing services for the now-troubled platform. Although the stablecoin issuer will officially address the level of its exposure to collapsed FTX in its next reporting period, its exposure is limited to its $10.6 million equity investment in the exchange. 

This was confirmed in a November 9 tweet thread by Circle’s CEO Jeremy Allaire. As per the tweet thread, Circle suffers no material exposure to FTX as it holds only a tiny equity position in the now-bankrupt firm. It also holds similar equity positions in BinanceUS, Coinbase, and Kraken.

Furthermore, Allaire said Circle has never held a position in FTT or traded the token. Also, it has never received FTT as collateral or made loans to either FTX or Alameda. According to the filing, the company has seized all of its services and transactions with the FTX Group and is currently accessing its future service to the FTX Group.

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Additionally, the filing revealed that Binance’s move to auto-convert USDC to BUSD contributed to the decline in USDC circulation from June 30, 2022, to September 30, 2022. Notably, Circle, which has been regulated in several jurisdictions across the world, recently relocated USDC reserves to the BlackRock fund, an American multinational investment company. 

Also, Circle extended its reach into other major blockchains like Arbitrum, Cosmos, NEAR, Optimism, and Polkadot to preserve its dominance in the cryptocurrency industry.

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