Circle CEO Calls FTX Collapse The Lehman Brothers Moment for Crypto

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Last Updated on November 9, 2022 by Bitfinsider

The co-founder and chief executive officer of Circle, Jeremy Allaire, commented about the ongoing FTX situation, which has once again plunged the crypto markets into upheaval and uncertainty. He referred to it as crypto’s “Lehman Brothers moment” and voiced his displeasure that a technology developed in reaction to that very time had now reached its full potential.

Allaire stated that Circle’s USDC stablecoin remained unaffected by the crisis despite the prevalent unpredictability in the cryptocurrency markets. Circle’s USDC is one of the largest stablecoins on the crypto exchanges, and any contagion from the current crisis that could affect it would be disastrous.

Allaire reassured users and market analysts, however, that Circle has been regulated in several regions of the world since 2014. He stated that the stablecoin is completely backed by cash and government-issued treasury bonds. Allaire said that USDC has extensive transparency records and is trusted by the world’s leading asset managers and custodians.

Allaire made these remarks in light of Binance’s announcement that it would purchase FTX in response to liquidity difficulties caused by the devaluation of its native FTT cryptocurrency. The FTT token has lost over 80% of its value after the CEO of Binance said that the largest cryptocurrency exchange in the world would sell all of its FTT token holdings, effectively igniting the turmoil.

The CEO of Circle further stated that the previous bull market introduced completely speculative value without considering utility, which, according to Allaire, was nonexistent. He went on to say that the current market slump has brought to light deeply ingrained problems in the crypto ecosystem, particularly with regard to transparency, counterparty visibility, and opaque organizations whose balance sheets are stuffed with speculative tokens.

Allaire urged the cryptocurrency sector to transition from its current speculative state to what he termed the “utility value phase,” which is dependent on increased transparency. He added that he believes the necessary infrastructure is already in place. Additionally, he concurred with Coinbase CEO Brian Armstrong, who argued that the absence of legislative clarity and restrictions in the United States had fostered a riskier, speculative atmosphere, causing companies to operate abroad.

This, according to Allaire, led to offshore regulatory arbitrage and the formation of “global hydra firms” without a defined location. According to Allaire, these firms dodged consequences and should be held to a higher standard of accountability.

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