The issuers of the two most important stablecoins on the market were summed up on Twitter to explain their connection with FTX Alameda. Jeremy Allaire spoke at length in a thread, seeking reassurance that the USDC is doing well. As for Paolo Ardoino (USDT), he was content to respond belatedly with a pithy and casual tweet, very much in the manner of the old Tether version.
The dreaded domino effect in the dramatic and sudden fall of FTX/Alameda
It will have escaped no one that the crypto industry is experiencing one of the most tormented episodes in its history. The consequences of the fall of one of the most important market players, the duo made up of the FTX exchange and the trading company Alameda Research, both belonging to Sam Bankman Fried (SBF), are still difficult to measure..
But we can fear a domino effect like Terra Luna, which has dragged down many crypto companies that had exposed themselves to the ecosystem, leaving thousands of investors on the floor. In the case of FTX/Alameda, the earthquake could be much more powerful due to the involvement of the number of players in the sector in the irresistible rise of a giant which, in the space of 5 years (2017 for Alameda , 2019 for FTX), will have known glory and a decline as spectacular as it is sudden.
In this context, and as fear grips the market and aggravates an already excessively tense situation, everyone is trying to save their marbles. And in the first place, the major figures, like Circle, the co-issuer of the USDC stablecoin, who work to reassure by communicating their link with moribund societies. Even if it means minimizing their exposure? The future will tell us, but in the meantime, what matters is avoiding panic and restoring confidence.
Circle: transparency operation
In fact, Circle CEO Jeremy Allaire visited Twitter to provide transparency and explain the company’s relationship with FTX and Alameda.
Circle is a small shareholder of FTX, and FTX is a small shareholder of Circle. Circle is also a small shareholder in Kraken, Coinbase, and BinanceUS.
Jeremy Allaire, CEO of Circle, on Twitter
He argues that Circle never made loans to FTX or Alameda and the company never received any FTTthe native crypto at the heart of the downfall of the FTX empire, warranty. Allaire added that Circle and FTX only own a small part of each other’s capital and as such, any risk of contagion was to be ruled out. Note, however, that FTX was one of the investors in Circle’s 2021 $440m funding round.
Without wishing to have a bad spirit, we must remain cautious in the face of this type of declaration. Just two days ago, SBF said in a since-deleted tweet that everything was fine for FTX.
And, remember the enthusiasm of the CEO of Circle to collaborate with FTX at the time of its splendor.
FTX continues to impress the world with lightning-fast execution and innovation, making it one of the most formidable companies in the global crypto ecosystem. With our latest collaboration, we continue to improve the customer experience for payments and crypto trading, and we are excited to continue building with Sam and the FTX team.
Jeremy Allaire in Circle Blog dated May 14, 2021
A difficult exercise or small (or big) accommodations with the truth
At the same time, it is hard to see each other publicly declaring their difficulties without immediately generating a detrimental snowball effect. The problem repeatedly mentioned in the crypto industry remains the centralized structures which distort the very essence of assets created to escape this need for trusted third parties. Afterwards, it is not surprising that we are witnessing the same phenomenon as in traditional finance. FTX’s insolvency crisis may well be Crypto’s “Lehman Brothers” Moment as qualified him a clairvoyant Jeremy Allaire, but not for all that transparent.
The CTO of Tether, the issuer of USDT, also just twittered that the market’s first stablecoin has no exposure to FTX or its sister company Alameda Research.
To be clear : #Tether has no exposure to FTX or Alameda. 0. Draw. Maybe it’s time to look elsewhere. Sorry guys. Try again.
Paolo Ardoino on Twitter
Difficult to believe it on words as long as a serious audit on the financial situation of the company remains in the state of wishful thinking.