Circle CEO Calls FTX Collapse Crypto’s Lehman Brothers Moment

Co-founder and CEO of Circle, Jeremy Allaire, stressed that a lot in the crypto industry needs to change, given the recent developments surrounding the FTX exchange. 

Altaire called the recent crisis crypto’s own Lehman Brothers moment, referring to the event that set off the unprecedented 2008 financial crisis. 

Crypto’s “Lehman Brothers” Moment 

Jeremy Allaire, the co-founder and CEO of Circle spoke about the ongoing FTX crisis, which has again thrown the crypto markets into turmoil and uncertainty. He called it crypto’s “Lehman Brothers” moment and expressed disappointment that a technology created in response to that exact moment has come full circle. 

“Finally, as someone who’s been involved in this industry for ten years, it is disappointing that a technology that was spawned in reaction to the Lehman Bros. moment of 2008 has given rise to its own version of the same. Lehman Brothers, of course, helped set off the 2008 global financial crisis.”

Circle Not Impacted 

Allaire also added that Circle’s USDC stablecoin remained unaffected by the crisis, despite the prevailing uncertainty in the crypto markets. Circle’s USDC is among the largest stablecoins in the crypto markets, and any contagion from the ongoing crisis that could impact it would be catastrophic. 

However, Allaire reassured users and market watchers that Circle had been regulated in many areas of the world since 2014. He further added that the stablecoin is fully backed by cash and government treasury bonds. Allaire also added that USDC has detailed transparency records and is trusted by top asset managers and custodians around the globe. 

“For Circle, we have always tried to operate with great trust and transparency. We’ve been regulated in many parts of the world starting from 2014. We’ve sought to build a culture of compliance and strong risk management and regulatory engagement.”

He further added,

“Our focus has always been on how we can harness crypto and blockchains to increase the utility value of money and build a financial system that is more open, inclusive, transparent, and accessible to all.”

The FTX Crisis 

Allaire made these comments against the backdrop of Binance announcing that it would purchase FTX following liquidity issues amidst the collapse of its native FTT token. The FTT token has lost over 80% of its value since the Binance CEO announced that the world’s largest exchange would sell its entire FTT token holdings, effectively starting the chaos. 

The Circle CEO also added that the past bull market introduced value that was entirely speculative in nature without looking at the utility, which according to Allaire, was non-existent. He further added that the current market downturn has highlighted deep-rooted issues in the crypto ecosystem, especially when it comes to transparency, counterparty visibility, and opaque companies that have their balance sheet filled with speculative tokens. 

Time To Move To A Utility Value Phase 

Allaire urged the crypto industry to move on from this speculative nature into what he called the “utility value phase,” which depends on added transparency. He added that he believes the infrastructure for such a transition is already in place. He also agreed with Coinbase CEO Brian Armstrong, who stated that the US’s lack of regulatory clarity and guidelines had encouraged a riskier, speculative environment, causing companies to operate offshore. 

According to Allaire, this created offshore regulatory arbitrage, creating “global hydra companies” without a known location. These companies, according to Allaire, avoided repercussions and should be held to better accountability. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.