Circle CFO says USDC is operating ‘as expected’

By:
on Nov 18, 2022
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  • Circle's CFO Jeremy Fox-Geen says the company is in a strong financial position despite the market turmoil.
  • An update released on Friday shows customers redeemed $7.7 billion worth of USDC in the past week alone.
  • Circle has minimal exposure to FTX and Alameda Research, Fox-Geen said.

Circle’s Chief Financial Officer Jeremy Fox-Geen has released an update on the operations of the company’s stablecoin USD Coin (USDC).

Fox-Geen’s statement is a response to the market turmoil following the collapse of crypto exchange FTX.

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In the past week alone, the fallout from FTX’s bankruptcy filing has seen crypto companies such as BlockFi and Genesis Trading halt customer withdrawals. Meanwhile, the impact across the industry has also hit SOL, with multiple exchanges including Binance and OKX, suspending USDC and USDT deposits on the Solana blockchain.

But Fox-Geen has sought to allay any fear within the crypto community about the stablecoin issuer and its asset.

$7.7 billion USDC redeemed in past seven days

According to the Circle CFO, USDC continues to provide safe harbor for the market amid the current volatility. Indeed, the amount of USDC in circulation has increased 4%, or by about $2 billion over the past week. A similar scenario unfolded after the Terra collapse in May, he said.

As for USDC redemptions this past week, Fox-Geen asserted all has been well – with all types of customers able to withdraw billions of dollars. Noting that USDC is operating as is expected, he added:

“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.” 

He also clarified that Circle has minimal exposure to collapsed FTX and Alameda Research. According to the update, the USDC issuer made a $10 million and $0.6 million equity investment FTX and FTX US respectively, the former representing only 0.05% of the bankrupt firm’s equity.

Circle also has “minimal exposure” to Genesis, which is a counterparty in the firm’s fixed-term yield product Circle Yield. The product targets institutional investors and had outstanding customer loans of $2.6 million as of 17 November, 2022. These outstanding loan balances “are protected by robust collateral agreements,” and remain overcollateralised, he added. 

Circle will also soon show that it remains in a strong financial position when it files its Q3 2022 financial reports with the US Securities and Exchange Commission (SEC).

“These financial statements show that Circle is profitable, cash flow positive, and in a healthy financial position.”

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