Crypto detective ZachXBT continuously criticizes Circle, especially after the controversial IPO on Wall Street.
Contrary to many people's beliefs, ZachXBT argues that Circle's leadership does not truly care about the cryptocurrency industry, questioning how the company handles security incidents and governance responsibilities.
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ZachXBT accuses Circle of being irresponsible towards the cryptocurrency industry and the USDC hack.
Circle and Coinbase have a complex relationship due to the nearly 1 billion USD USDC revenue-sharing agreement.
Expert Arthur Hayes criticizes Circle's reliance on Coinbase, leading to high stablecoin issuance costs.
Why does ZachXBT criticize Circle so strongly?
Analysis from cryptocurrency expert ZachXBT shows that Circle has been continuously accused of indecisiveness in handling USDC asset hacks. For example, Circle did not freeze 115,000 USDC related to North Korea's Bybit hack, while Tether froze 106,000 USDT from the same incident. This raises questions about Circle's irresponsibility in protecting users.
"Circle leadership does not actually care about the industry."
ZachXBT, Crypto detective, 2024 on X
Circle's silence and lack of response after numerous criticisms have further diminished trust within the community. ZachXBT also emphasized CEO Jeremy Allaire's relationship with 'underground forces' in the industry, calling it the reason for Circle's lack of transparency.
What impact does Circle's IPO have on the market?
Circle went public with a price below 40 USD per share and quickly surged to over 300 USD within just over a month, bringing the company's valuation to nearly 80 billion USD. This event attracted skepticism as Coinbase and Ripple were rumored to want to acquire Circle but the company refused to pursue a higher valuation in the stock market.
This outstanding IPO achievement has also led experts to warn about bubble risks and unclear actions from Circle.
Why does Circle have to share USDC revenue with Coinbase?
According to expert Arthur Hayes, Circle still has to rely on Coinbase to maintain the USDC ecosystem due to a lack of an integrated customer base. This leads Circle to pay up to 900 million USD in 2024 to Coinbase, equivalent to 50% of the revenue from USDC reserves, increasing stablecoin issuance costs.
"Distributing a stablecoin can be very expensive unless you are owned by a captive exchange."
Arthur Hayes, Cryptocurrency Analyst, 2024
This agreement stems from a 2018 collaboration between Circle and Coinbase in the Centre Consortium, with Circle now owning all USDC but still maintaining a profit-sharing agreement. Hayes likened Jeremy Allaire's need to accept the agreement from Coinbase due to market pressure and strategic dependence.
What controversies surround the level of trust in Circle within the cryptocurrency community?
Although ZachXBT once admitted to trusting Circle more than Ripple, he still disagrees with how Circle handles security responsibility and transparency. The community also questions the actual control and transparency in Circle's governance.
Circle's silence after a series of accusations and the emergence of reputable individuals criticizing has raised concerns about the sustainability and business ethics of this company.
Real-world examples of the impact of the Circle and Coinbase agreement
Company USDC Revenue Sharing Rate Affects Stablecoin Issuance Costs Note Circle 50% Costs up to nearly 1 billion USD/year due to revenue sharing Dependence on Coinbase for USDC distribution Tether (USDT) Does not share Reduced costs thanks to Bitfinex supporting distribution Global market recognition advantage
Frequently Asked Questions
Why is Circle accused of not freezing USDC during the hack? Circle is accused of not freezing 115,000 USDC from the Bybit hack, unlike Tether which acted, raising concerns about security responsibility. What impact did Circle's IPO spike have? Circle's IPO created a surge in stock prices, attracting attention but also raising concerns about transparency and bubble price risks. Why does Circle have to pay 50% of USDC revenue to Coinbase? Circle depends on Coinbase for USDC distribution, leading to a 50/50 revenue-sharing agreement, putting significant cost pressure on Circle. How does expert Arthur Hayes evaluate the Circle – Coinbase relationship? Arthur Hayes believes Circle is controlled by Coinbase, increasing stablecoin costs and forcing CEO Jeremy Allaire to accept strict conditions. Does Circle gain trust from the cryptocurrency community? Although seen as more reliable than Ripple by an expert, Circle still faces many questions about transparency and accountability due to hacks and silence in the face of criticism.
Source: https://tintucbitcoin.com/zachxbt-to-circle-khong-quan-tam-crypto/
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