- Falcon Finance’s “synthetic dollar” was spent on Monday.
- Falcon claims that the USDF is overlapping and audited.
- Critics have questioned the composition of its reserves.
Controversial crypto director Andrei Grachev has promised more details concerning the $ 630 million basket in cryptographic assets supporting the USDF, a token that lost its pear because of the US dollar on Monday.
USDF tokens are supposed to have a value of $ 1 but fell to $ 0.992 on July 7. They negotiated at $ 0.996 Wednesday evening in New York.
The USDF is the 15th Stablecoin in the world, with a market value of around $ 550 million. He is issued by Falcon Finance, a subsidiary of the Crypto DWF Labs negotiation company.
Falcon calls the USDF a “synthetic dollar”, a term popularized last year by Ethena. The transmitter of the USDE token pointed in dollars, Ethena abandoned the most common “stable” label after criticism of USDE design, users exposed to higher risk than traditional stables.
Unlike most of the tokens pointed out in dollars, Ethena and Falcon Finance use cryptographic assets and the benefits of a complex trading strategy to keep their tokens ankle.
The USDF is over-collateralized, according to the Falcon website: the crypto which supports the token is worth $ 630 million, but only 550 million USDF tokens are currently in circulation.
However, criticisms on social networks have questioned the affirmations that the token is entirely supported.
In an apparent attempt to repress criticism, Grachev, CEO of DWF, said that he would share the exact composition of the cryptographic assets that support the USDF next week.
Falcon holds around 89% of its reserves, or $ 565 million, in Stablecoins and Bitcoin, Grachev said on Tuesday. The 11%, or 67 million dollars, are detained in various other cryptocurrencies, he said.
“Basically, we can accept assets that can be covered correctly by PERPS,” said Gratchev.
Of the $ 630 million in crypto supporting the USDF, only $ 25 million, or about 4%, take place on the air. The remaining $ 607 million are detained outside Chain, divided between four goalkeepers: Binance, Fireblocks, Ceffu and Chainup.
This means that 96% of the reserve medium cannot be checked independently by anyone with an internet connection.
The so-called “reserve reports” are published daily by the accounting firm based in London Harris & Trotter. But they only show the amount of the dollar of assets held with each goalkeeper.
Falcon does not share the composition of reserve assets outside the chain.
“I will update the transparency page next week,” Grachev said on Tuesday. “You will see an appropriate ventilation of the active ingredients, lock the BTC, the stables, the altcoins.”
Falcon also said that Harris & Trotter was preparing an “ISAE 3000 (highest audit note)”, although the international board of audit and insurance standards describes ISAE as “insurance commitments other than audits or reviews of historical financial information”.
Falcon generates income thanks to a variety of trading strategies, including trading, arbitration and stake awards, said Grachev. He also declared that he only used neutral market strategies, eliminating risks in the case of market drop.
“Each USDF struck must be supported by a stablecoin or a covered position which represents a value in dollars and has no directional risk,” he said.
Grachev also noted that the PEG is “maintained organically by traders, if the price of the USDF is greater than $ 1, traders strike and sell, if they are less than $ 1, traders buy and buy, bearing risk free trade”.
Despite these statements, criticism exploded Falcon on social networks. Among other things, they shared their suspicion The synthetic dollar of Falcon is supported by very illiquid assets which would plunge into value if Falcon was obliged to sell them to the redemptions of the honor holders of the USDF.
The crypto risk management company, Llamarisk, said in a report published in May, he had found problems with the design of the USDF.
“The Falcon team has a unilateral authority on the operational management of reserve assets. Insolvency can occur due to operational mismanagement or failure of the underlying strategies that include exposure to CEX exchanges and challenge strategies, “said Llamarisk.
The USDF can be struck using a wide variety of alternative cryptocurrencies, according to the report, many of which have a limited offer, such as dolomite, a project whose token had a market value of $ 16 million. The token could be used as a guarantee to reach up to 50 million USDF, according to Llamarisk.
This is not the first time that one of the Grachev companies has faced controversy.
DWF was accused of having made more than $ 300 million in Wash Trading by a former Binance initiate. The company also had to reject one of its partners after being accused of having drugged a woman.
Zachary Rampone is a DL News correspondent. Do you have a tip? Contact him to zrampone@dlnews.com.
