Circle’s profits are not as good as Tether’s, and the responsibility lies with its “original family”

Author: 0xTodd; Source: X, @0xTodd

Circle’s profits are so thin. In my humble opinion, the main blame is on the family of origin.

First of all, to make an inappropriate metaphor, the relationship between Tether and Bitfinex is that of conjoined people, while Coinbase is an old mother who always asks her son Circle for money.

Fiona mentioned that Circle’s channel fees allocated to Coinbase in 2024 will be US$900 million, and the company’s annual gross profit that year will be only US$400 million.

Although this value is exaggeratedly high, it is the reality, and I have even experienced it myself.

I still remember that in order to promote its perpetual contract, Coinbase launched an activity to earn 12% interest on depositing USDC, with a maximum of 1M funds.I saved it, and it really paid interest every month.

Frankly speaking, I don’t think I deserve the 12%. I neither placed an order nor made a market. I just transferred USDC to Coinbase and I got so much for nothing.

This is the channel fee. Coinbase’s new business users have a good time, which is all due to Circle’s heavy burden.

Circle’s latest financial report still mentions these growing channel expenses.

In fact, Coinbase made $6 billion last year, with profits of $3 billion, but it still wants money from Circle, its own son.

In the past, Coinbase held 50% of Circle’s shares, but later diluted 3.5%-4% in order to go public.However, Coinbase still shares a large amount of interest. For example, all the interest on USDC within Coinbase belongs to Coinbase, while those outside the site share 50%.

So Circle is actually a feeder of Coinbase.

Of course, Tether also has its own tricks.

Tether claimed to have made tens of billions of dollars in profit last year.

But I have carefully studied what they disclosed. You must know that in 24 years, Tether invested 140 billion U.S. dollars. Even if the interest on U.S. debt reaches 5%, it is impossible to reach 10 billion U.S. dollars by relying on interest alone.

In fact, Tether added up all the money they spent speculating on Bitcoin and gold, plus interest, and this amounted to tens of billions of dollars.

After all, Circle is regulated and cannot use user funds to buy Bitcoin and gold.

And Bitfinex, no one knows how profitable it is right now.However, based on the repurchase of LEO (Bitfinex platform currency), the revenue may be between 400 and 800 million U.S. dollars, which is not at the same order of magnitude as Tether.

Not to mention that Bitfinex does not need Tether blood transfusion, even if it does, Tether can easily afford it.

One family needs a blood transfusion, and one family does not.

PS: Of course, Bitfinex was indeed supported by Tether in the early years. In 2018, Bitfinex had a frozen bad debt of US$850 million, which was embezzled from Tether’s reserves.This matter is also the root cause of New York prosecutors’ prosecution of Tether.

PS2: So now there is only a hint of FUD about USDT. Back then, Tether’s operation style was extremely reckless, and it didn’t even collapse at that time, not to mention the current situation of excessive margins.

As for why Bitfinex can directly misappropriate it, and why I say they are conjoined, it is because their executives are the same group of people. I will let everyone use the executive information compiled by Gemini as a reference.