By George Ward
Circle, the issuer of the USDC stablecoin, recounts its ordeal in transactions leading to its financial projects’ miscalculation. Circle attributed its loss to the recent FTX collapse and decisions by Binance, its rival.
Binance Exchange in September had publicly announced its intention to automatically convert USDC to its stablecoin Binance USD (BUSD). However, the collapse of the FTX exchange platform crippled this plan and the plans of most other crypto projects.
Circle’s miscalculations were noted in its amended S-4 statement of registration, and was filed on Nov.14 to the United States Security Exchange Commission (SEC).
Furthermore, the SEC has set aside regulations guiding the purchase of an existing company and partnership events. These regulations involve the S-4 form, a document filled out by companies and submitted to the SEC for approval before engaging in such business dealings.
Circle Recounts BUSD Conversion Exposure To Its Firm
Circle recently announced the effects of Binance auto conversion from USDC to BUSD on its company, noting a rough estimate of $3.0 billion out of $8.3 billion drop in the circulation of USDC from June 30 to September 30, 2022.
The USDC stablecoin issuer further explained the enormity of the loss incurred by its firm. It stated that an additional fund of $13.5 billion USDC that was issued since June 30 was 36% minimal compared to the same period last year.
In August 2021, Circle submitted the first S-5 filing to the SEC, which entailed the company’s proposed plans to partner with Concord Acquisition, a capital markets firm. Surprisingly, the Concord firm postponed the merger signing until January 31, 2023.
According to the CEO of Circle and co-founder Jeremy Allaire, the company had business dealings with the FTX platform. The CEO noted that Circle had historically performed payment transaction activities for the now-bankrupt exchange.
He added that Circle has been issuing USDC to the crypto exchange through its payment API client for over 18 months. Circle’s CEO revealed that its financial position on the FTX exchange platform’s balance sheet is close to $10.6 million of owners’ equity.
He added that the firm would publish more official details in subsequent reports. The CEO stated in the filing that its transactions and services with the FTX exchange had been suspended.
Hence, the firm can properly evaluate the future impact of its services with the FTX platform. In addition, the firm will also evaluate the financial impact of the recent bankruptcy incurred by FTX.