- Circle testified to the SEC that the automatic conversion of USDC to BUSD on the Binance platform has caused the circular supply of USDC to decrease.
- Circle does not believe that it is possible to meet its financial projections for the circulating supply of USDC given the current market situation.
- Circle has substantiated to the SEC that of the approximately $8.3 billion decrease in USDC in circulation from June 30, 2022 to September 30, 2022, $3 billion was driven by Binance’s automatic conversion.
Circle, the issuer of the world’s second largest stablecoin, USDC, assured in a filing with the United States Securities and Exchange Commission that the automatic conversion of USDC to BUSD on the trading platform Binance has caused the circular supply of USDC to decrease.
Recall that in September, Binance made the decision to automatically convert all users’ USDC to its own stablecoin called BUSD.
Under this context, Circle does not believe that it will be possible to meet its financial projections regarding the circulating supply of USDC given the current market situation. and hence, filed his statement S-4 amended filing with the SEC on November 14.
S-4 is a document that companies complete and submit to the SEC before executing a merger, providing an exchange offer, or taking control of a company other than their own. As a matter of fact, in August 2021, Circle introduced the first S-4 when it was planning to merge with Concord Acquisition.
How is Binance’s decision impacting USDC?
Binance is the largest crypto exchange in the world but, in addition, it is also the issuer of the third largest stablecoin, the BUSD. As we mentioned earlier, in September the crypto exchange announced that it would automatically convert clients’ holdings from USDC, USDP, and TUSD to BUSD.
At the time, Binance assured that the decision was aimed at “improve liquidity and capital efficiency for users“, and now, Circle has substantiated to the SEC that of the approximately $8.3 billion decrease in USDC in circulation from June 30, 2022 to September 30, 2022, $3 billion was driven by Binance’s automatic conversion.
Circle’s estimate is based on the fact that, from August 17 to September 30, BUSD experienced an approximate $3 billion increase in BUSD in circulation.
Is Circle being affected by what happened with FTX?
On September 9, Jeremy Allaire, CEO of Circle, claimed on Twitter that the company had never made any loans to FTX or Alameda and had never received FTT as collateral.
Amismo said Circle only has a “tiny” equity position in FTX and therefore does not represent a “material exposure” on the company’s balance sheet.
Now, with the SEC filing, Circle revealed that its exposure to FTX would be a US$10.6 million investment.
“The Company has suspended its services and transactions with the FTX Group and is in the process of evaluating the impact on the provision of future services to the FTX Group and the possible indirect financial impact of the bankruptcy of the FTX Group.”indicates the document.
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