The Centre Consortium, a board comprised of board members from COINBASE and Circle, is falling behind on audits again. The last audit for the month of April 2021 was certified on June 9th, 2021. Since then the outstanding supply of 14,697,267,257 USDC has grown to 24,694,071,371 USDC an astounding near doubling.
Last seen April 2021
On its own this would not be concerning since the Circle /Centre publicly audits contracted out to Grant Thornton generally run a month and few days to two months behind month end. Like an onion this story of a digital dollar has many layers and a 50% week over week increase cannot remained unnoticed to those vigilant in the cryptocurrency space. USDC has trust in the space even though their reputation was damaged when they, like USDT before them (current USDT blacklisted address count: 477), blacklisted 6 addresses from sending USDC per United States law enforcement request. Their blacklist has not increased since, however their official policy states: "This Policy is subject to annual review. Material changes are subject to approval by majority vote of Centre Board of Managers." Could this be Dana Wagner legalese for we took Goldman Sachs and Baidu money and might ban addresses at will at a later date if we become the standard and decide it is beneficial to do so or do they really believe they can responsibly manage a blacklist function for the purpose of KYC, AML, and CFT compliance?
The issue at hand though is the increase in supply relative to the total stablecoin market during this period of lag in audits. In June we knew that in April Centre has enough USD on hand to pay out the entire supply of 14 billion USDC, but now in July do we know that Centre can still sustain 20 billion dollar panic? It seems unfair to hold Centre to a higher standard since many banks hold only 10% of a depositors funds as liquid capital, but there is an increasing tension between Tether and cryptomarkets on the whole after the Caribbean audit with several red flags from Moore Cayman (Commercial Paper anyone?). Many forget there are pairs of USDT/USDC which have a weight towards USDT liquidity. Thousands are profiting of the arbitrage from this difference in trust between the two stable coins. In the 20th century several panics were set off by a few bad actors buying train, copper, and radio stocks with similar patterns as see with what people are achieving with Tether in Defi. You can only pump a balloon so much before it pops and the ensuing shockwave hits the domino slide on Rube Goldberg machine of human financial suffering. My position to the Centre Consortium, PLEASE update your audits as quick as humanly possible, you control over 30% of the stablecoin market and there needs to be leadership from the front to continue to build upon the trust you gained.
