Stablecoin Issuers Tether And Circle Deny Having Significant Exposure To FTX (FTT) And Alameda

Stablecoin Issuers Tether And Circle Deny Having Significant Exposure To FTX (FTT) And Alameda

  • Circle CEO Jeremy Allaire said that the stablecoin issuer has no “material exposure” to either FTX or Alameda Research. However, he admitted that the firm has a small equity stake in FTX.
  • Tether CTO Paolo Ardoino denied the company having any exposure to the troubled duo and said “maybe it’s time to look elsewhere.”
  • Ardoino didn’t deny Alameda being a large holder of USDT but said that the crypto trading firm bought USDT with USD, not FTT or any other coin.

The industry-leading stablecoin issuers Tether and Circle have denied having exposure to FTX (FTT) and Alameda Research, a crypto trading firm closely associated with the troubled exchange.

Jeremy Allaire, co-founder and CEO of Circle, the company behind the second largest stablecoin, USDC, said that while both FTX and Alameda have been Circle’s customers for years, the firm has “material exposure” to neither of them.

“Circle has never made loans to FTX or Alameda and has never received FTT as collateral. And has never held a position in or traded FTT.  In any case, Circle does not trade on its own account,” he said.

However, Allaire admitted that Circle has a small holding in FTX equity, among other centralized exchanges.

“Circle is a tiny equity holder of FTX, and FTX is a tiny equity holder of Circle. Circle is also a tiny equity holder of Kraken, Coinbase and BinanceUS,” he added.

According to Allaire, both FTX and Alameda had no privileges when using Circle’s products, like creating and redeeming USDC. He added that Circle holds itself to “very high standards of accountability and transparency.” It is currently readying to become a listed company on the New York Stock Exchange (NYSE).

Paolo Ardoino, CTO of Tether, also denied the rumors that Tether has exposure to FTX and Alameda. He asserted that “maybe it’s time to look elsewhere” and that “Alameda has issued and redeemed a lot of USDT in the past. But no credit exposure has been matured.”

However, a report published a year ago found that Alameda and Cumberland Global, another crypto trading company, bought about two-thirds of all USDT whose current market cap is almost $70 billion, according to data from CoinGecko.

Ardoino was quick to clarify that Alameda bought its USDT with USD and reiterated that Tether has “No exposure. No leverage. Just simple transactions. Simple as that.”

Alameda is believed also to be insolvent. Some reports indicate that it’s been close to being underwater since the collapse of the Terra (LUNA) ecosystem earlier this year. FTX is said have provided billions of dollars in funding to keep it afloat.

On the Flipside

  • The two stablecoin issuers have yet to provide proof that they have no exposure to FTX, FTT, or Alameda.
  • Ardoino didn’t deny Alameda being a large holder of USDT. If the trading firm is truly underwater, this could set another bank run on Tether.
  • Tether has been the subject of multiple controversies over the years. Critics say the company hasn’t done a proper audit to this day and more stablecoin regulations are needed to keep them in check.

Why You Should Care

Stablecoins are one of the most important assets in the crypto industry. If it turns out that both Circle and Tether had significant exposure to FTX and Alameda, the contagion from the insolvency of FTX might spread even further.

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