Circle predicts $3 billion loss due to USDC to BUSD conversion

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Circle, the issuer of the USDC stablecoin, reported that due to the default of FTX and the conversion of USDC to BUSD on the Binance exchange, it had to recalculate its financial forecasts.

Circle filed a complaint with the Securities Exchange Commissionand the US Exchanges (SEC) amended registration statement S-4. The company said it was unable to assess how significant a role the USDC to BUSD conversion on Binance would play in reducing the stablecoin's circulation. BUSD volume increased by approximately $3 billion from August 17 to September 30. Circle added that the additional $13.5 billion issued since June 30 represents a 36% reduction compared to 2021.

S-4 is a registration statement thata company files with the SEC before merging or acquiring another company or making an exchange offer. The first S-4 filing was filed with the SEC in August 2021, when Circle was planning a merger with capital markets company Concord Acquisition. However, in October, Concord decided to delay the merger "no later than January 31, 2023."

Regarding cooperation with FTX, Circleprovided the exchange with payment processing services. According to the company's statement, it owns only a "tiny" share of FTX shares. The stablecoin issuer said the financial impact that FTX could have on its balance sheet would not exceed $10.6 million. The company has now suspended its exchange operations and is in the process of assessing the potential indirect financial impact of FTX's bankruptcy.

Last week, Circle co-founder Jeremy Allaire said his company has nothing to do with FTT or other assets.