The cryptocurrency market has experienced a turbulent period as of late, with several firms filing for bankruptcy or shutting down. Voyager Digital announced its bankruptcy on Wednesday, becoming the second crypto lender to default following Three Arrows Capital.
In the light of present market circumstances, Circle has sought to reaffirm its commitment to openness and user security in a blog post published on Tuesday. Jeremy Fox, CFO of Circle, said that his firm's priority is to preserve the financial integrity of the system - robust, trustworthy, and safe. He added that other financial institutions offer fraudulent promises of preserving user money, only to abandon them when the going gets tough.
The CFO said that Circle's business model is to minimize risk, not “taking and managing risk.” He also explained how the firm protects its USD Coin (USDC) reserves, emphasizing that Circle does not own these assets and that they are 100 percent owned by USDC holders in segregated accounts labeled "for the benefit of USDC holders." Fox wrote:
"Circle is not allowed to use the USDC reserves for any other purpose. Unlike a bank or an exchange or an unregulated institution, we cannot lend them out, we cannot borrow against them, and we cannot use them to pay our bills."
As a result, in extreme situations like bankruptcy, the USD Coin (USDC) is purportedly still redeemable at face value. Also, the USDC reserves are completely disconnected from Circle's other activities, minimizing the risk of them being used to covering other losses.
