Jeff Dorman, the chief investment officer of Arca, recently strongly criticized Circle for allocating “insignificant” CRCL shares to Arca in its oversubscribed IPO. This controversy over the allocation of new shares has exposed the deep-seated contradictions between traditional finance and the crypto industry in capital operations.
A subscription of 10 million only received 135,000, with a distribution ratio of less than 1.4%
According to Dolman’s disclosure, Arca submitted a $10 million stock subscription order in Circle’s IPO, but ultimately only received a quota worth $135,000, with an actual allocation ratio of less than 1.4%. This is like ordering a Manchu-Han imperial feast from a restaurant, only to be served a plate of peanuts in the end. He sarcastically said on social media.
In contrast, many traditional financial institutions that have not delved deeply into their prospectuses or even have no experience in using cryptocurrencies have received distributions of millions of dollars. Internal data shared by Dolman shows that a certain Wall Street hedge fund received a quota of 8 million US dollars based solely on “general industry research”, which is nearly 60 times that of Arca.
Accusing Circle of favoring traditional institutions, it announced the complete termination of cooperation
Circle’s distribution policy is a humiliation to crypto native institutions. In his open letter, Dolman accused Circle of deliberately favating traditional financial players. “They would rather distribute their stocks to the old forces on Wall Street who don’t understand blockchain than support partners who truly build the industry.”
In response, Arca has announced the closure of all Circle accounts and the transfer of managed assets worth 680 million US dollars to competing stablecoins such as USDT. We will not associate with platforms that discriminate against industries. Dolman emphasized that the funds under Arca will no longer use USDC and instead support a “fairer competitive ecosystem”.
Circle’s IPO broke its share price on the first day of trading, intensifying market concerns over distribution disputes
Circle went public on Nasdaq on June 5th. The CRCL, with an offering price of $11, broke its issue price on the first day, hitting a low of $9.2, with a single-day decline of 16.4%. Market analysis suggests that the controversy over the distribution mechanism has magnified the selling pressure.
When a company that serves as a bridge between fiat currency and crypto creates new separations in its IPO, investors can’t help but question its long-term vision. Blockchain researcher Li Ming pointed out that Circle’s approximately 62% of its revenue relies on the interest from USDC’s reserve of US Treasury bonds, and this controversy may lead to crypto institutions withdrawing from USDC, further undermining its profit base.
Industry shock: Crypto organizations launch a “Distribution Fairness” petition
The incident triggered a collective backlash in the crypto industry. More than 50 institutions have signed a joint letter, demanding that Circle disclose its distribution standards and committing to “giving priority to cooperating with platforms that respect the industry”. Decentralized finance platform Aave even announced that it will reevaluate the liquidity weight of USDC in its protocol.
As of the time of publication, Circle has not made an official response to the distribution dispute. However, insiders revealed that the company is holding an emergency board meeting to discuss the “institutional client relationship repair plan”. The turmoil triggered by the $135,000 quota may become a crucial turning point for the standardization of capital operations in the crypto industry.
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