USDC's stablecoin operating mechanism may be on the verge of collapse

The cost of maintaining a working stablecoins and fiat currency exchange scheme is causing the project to lose money.

The main reason is that Circle is losing money to pump up USDC's market capital. Circle pays a higher rate than what Signature and Silvergate typically do on a fiat cash deposit (i.e., you pour in a dollar, and a stablecoin comes in, but there's a fee for that). Signature converts every dollar of its customers into USDC for this purpose.

The following information came as a tweet on Geralt Davidson's famous account with the tag @CryptoInsider23 (translated as "crypto insider").

Sources of the person talking about the problem say the rate is about 5% per year at current interest rates. That's why Circle is constantly losing money. They have raised money twice a year to pay these costs for the past few years. Circle has already lost 500 million in Q1 2022 and will lose 1.5 billion in total for 2022!

The Circle is also using an offshore Bermuda company to provide credit to the USDC to avoid U.S. scrutiny and disclosure. Though this is a classic scheme for crypto, it is worth considering this factor as well.

Also, a person on Twitter with the nickname @CryptoInsider23 talked about shady schemes that Circle may be running, specifically with loans. USDCs are now made available to high-risk lenders. Customers of these loans include Genesis, BlockFi, Celsius, Galaxy, Alameda, and 3AC. This is a list of almost all the borrowers who have been hit hard or collapsed in the last few months of the market downturn.

The whistleblower added that the size of the hole formed in the USDC is now $3-5 billion.

Some facts can be questioned, but in another wave of FUD, such tweets may seem like an incredible discovery. 

And in general, we advise you to think with your head because FUD during a bear market is some trend, and it spreads faster than airdrops on Aptos. And many cryptocurrency skeptics immediately re-shoe right back after the bit at 60, once again stating, "Nah, well, this time it's the end of crypto!" :D.

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