Circle’s Investment in the Hacked Nomad and Slope Wallets Might Spell Trouble
- Circle Ventures participated in the $8 million Series A for Slope Finance in February and the $22.4 million seed round funding for Nomad in April.
- The USDC Stablecoin issuer plans to go public this year.
- Further, they raised $400 Million in funding this April.
The crypto industry is not devoid of faults and inefficiencies. Cross-chain-bridges and hot wallets have exposed their vulnerabilities, once again putting user funds in the hands of hackers. Recently, $200 million was drained from Nomad, and $6 million was drained from Slope Financial wallets.
One aspect that binds both these projects is that they are backed by Crypto payment firm Circle’s Internet Financial’s venture-capital division. Circle’s VC division-Circle Ventures, participated in the $8 million Series A for Slope Finance in February and the $22.4 million seed round funding for Nomad in April.
Investing in 2 hacked companies spells more trouble for the firm if they are also looking to go public this year. The USDC stablecoin issuer’s plans to go public this year are now unlikely to happen. The recent hack on Slope and Nomad only adds to Circle’s growing list of concerns. Recently, the firm has been facing increased scrutinization from federal and monetary authorities following the crash of ThertherUST-another stablecoin.
Earlier this year, Circle Internet Financial raised $400 million in a funding round that included BlackRock, Fidelity, Marshall Wace LLP, and Fin Capital investments. The company plans to go public through a SPAC (special purpose acquisition company) merger.
According to Circle spokesperson, the firm’s ties to Nomad and Slope didn’t cause any financial damage to the company. The investments, however, indicate the firm’s bad judgment and can likely slow down the process of gaining investors.
The global FinTech startup and the stablecoin issuer have experienced significant growth in recent years. The total number of Circle accounts is estimated to grow by 229% over the next few years to over 30,000 in 2023.
In July, Circle released an unaudited reserve report showing that USDC is backed by $42.1 billion in short-term U.S government bonds and $13.6 billion in cash, which could be used to stabilize the USDC’s peg and clamp down liquidation fears.
Circle’s USDC is the second largest stablecoin with a $54 billion market capitalization. Tether bags are the first spot among stablecoins with a market cap of $66 billion.
Besides Circle, several other big names in the industry have also invested in Nomad and Slope. Nomad is backed by non-fungible token (NFT) marketplace OpenSea, Crypto.com Capital, crypto market-maker Wintermute, decentralized finance (DeFi) platform Gnosis and the Polygon blockchain. Some prominent names which back Slope include Sequoia China, Genesis Trading, CMS Holdings, Spark Digital, Huobi, and others.