Circle opened investment in FTX

The USD Coin (USDC) stablecoin issuer, Circle, owns investment in FTX Group shareholder capital in the amount of about $ 10.6 million. The company reported this in a statement for SEC .

On November 11, the maternal company FTX, ALAMEDA Research and about 130 more affiliated legal entities filed a bankruptcy statement.

“The company recognizes the depreciation of its investment in the reporting period. We have stopped services and transactions with FTX Group and are currently evaluating indirect financial impact of potential bankruptcy, ”the Circle submitted by the updated form S4.

On November 9, against the backdrop of a flashing liquidity crisis, FTX, CEO Circle Jeremy Allaire published a thread in order to dispel the influence of the company’s business company’s business.

According to him, the structures of Sam Bankman-Frida received services for about a year and a half, such as the possibility of release/repaying the USDC or access to the API on the same conditions as other customers. He added that Circle never provided FTX and AlaMeda loans, and also did not sell FTT token.

Allaire called the company a “tiny” shareholder of FTX, whose share in Circle also described.

The representative of Circle explained Decrypt that the company does not disclose information about investments if it is not about significant amounts.

For this reason, Allaire did not announce the volume of investments in FTX. However, since Circle is in the process of entering the stock exchange through the deal with the Spac Concord Acquisition Corp, in the appropriate form for the SEC the amount decided to indicate, he emphasized.

Circle announced a merger with Concord in July 2021. Then the combined company was estimated at $ 4.5 billion, but in February 2022, under the new transaction conditions, the forecast value of the company increased to $ 9 billion.

The parties intended to complete the reverse merger until the end of this year. However, Concord moved the deadline for “no later than January 31, 2023”. To approve the procedure, the company will hold a special meeting of shareholders instead of an annual.

In the documents for the Circle regulator, she admitted that she would not be able to fulfill forecast indicators under the previous agreement. As the main reasons, the company called:

  • the fall in the cost of the main cryptocurrencies in 2022;
  • The collapse of large industry players like FTX, Voyager Digital and Celsius Network;
  • growth in interest rates in the United States, which caused an outflow of funds from USDC.

The company also indicated the Binance solution to automatically convert a USDC in BUSD on its platform. However, it was difficult to assess the influence of these operations on financial results.

Recall that Jeremy Allaire compared FTX insolvency with the Lehman Brothers Investbank collapse, which became a catalyst for the 2008 world financial crisis.

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