According to rumors, Circle is losing money on its USD Coin (USDC) product. The CEO denied the rumor even though he says he understands the paranoia.
Jeremy Allaire recently said Circle is enjoying its most solid financial position, and this status will continue to increase its transparency in the future. With those words, the founder and CEO of the company that deals with the stablecoin USD Coin (USDC) sought to end rumors about the company facing a Crashdown.
A Twitter user nicknamed Geralt Davidson revealed a thread a few days ago explaining that Circle is losing money, leading to USDC losing parity with the US dollar. Some of their sources lack verification and would be people linked to what is happening internally in the company.
With little time has passed since the collapse of Terra USD (UST), which was the third-largest stablecoin by market capitalization, rumors like these generate an uncertain scenario among digital asset users.
Allaire said that it is understandable why some users may show concern given the background of hucksters in digital assets. However, he also explained that they have always tried to keep themselves reigning in the highest standards. Allaire said this move has allowed them to work with regulators, top-tier insurance firms, and leading financial entities.
The businessman also explained that USDC got overcollateralized, so there would be no risk of losing its peg to the US dollar. According to the entity website, every USDC digital dollar on the internet gets 100%supported by cash and short-term US Treasury bills, so it is always redeemable for dollars.
The one who goes through a similar road is Tether, the company in charge of the USDT. That company currently supports its stablecoin, among other tools, with commercial paper (relatively high risk). The strategy relies on progressively lessening exposure until reaching zero.
Assets Losing Peg to the Dollar
The unfurl of UST and Luna has followed along with an unexpected decline in the market value of bitcoin, the largest and most popular digital asset. Bitcoin’s value recently fell below $30,000
For his part, Kwon refused to admit defeat even as UST and Luna lost almost all their value. He recently tweeted and carried out many potential fixes that, according to him, would help stabilize the price of Luna and bring UST back into peg with the dollar.
By: Jenson Nuñez
