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Arca’s Fallout with Circle: A Crypto Betrayal or Strategic Misstep?

Introduction: The Arca-Circle Rift

Arca, one of the earliest backers of Circle, has publicly severed ties with the stablecoin issuer following a controversial allocation process during Circle’s recent initial public offering (IPO). The fallout has sparked heated debates within the crypto community, raising questions about the alignment of interests between crypto-native firms and traditional financial institutions (TradFi).

Circle’s IPO: A Milestone for Crypto

Circle, the issuer of USDC, the world’s second-largest stablecoin, made its public debut on the New York Stock Exchange (NYSE) on June 5 under the ticker CRCL. The IPO raised $1.05 billion, with shares surging 167% on the first day of trading, closing at $82. By June 6, the stock had climbed further to $115 per share during intraday trading. This marked a significant milestone for the crypto industry, as Circle gained access to traditional finance’s deepest capital markets.

Arca’s Discontent: A “Measly” Allocation

Despite Circle’s successful IPO, Arca’s Chief Investment Officer, Jeff Dorman, expressed outrage over the allocation process. Arca had placed an order for $10 million in Circle shares but received only $135,000 worth—a mere 1.35% of its request. Dorman criticized Circle for favoring TradFi mutual funds and hedge funds over crypto-native firms, calling the allocation “a joke.”

Key Points from Dorman’s Open Letter

  • Neglect of Crypto-Native Firms: Dorman accused Circle of prioritizing traditional financial institutions that likely have no wallets and will never use Circle’s products.

  • Betrayal of Early Supporters: Arca, a long-time supporter of Circle and USDC, felt sidelined despite its contributions to the stablecoin’s growth and resilience during crises.

  • Closing Accounts: Arca announced it would close all accounts with Circle and discourage other firms from partnering with the stablecoin issuer.

The Broader Implications for Crypto

The controversy surrounding Circle’s IPO allocation highlights deeper issues within the crypto industry. Dorman’s criticism underscores the tension between crypto-native firms and TradFi institutions, as well as the challenges of maintaining alignment of interests in a rapidly evolving financial landscape.

Alignment of Interests: A Missed Opportunity

Dorman emphasized the importance of rewarding early supporters and aligning interests to foster long-term growth. He pointed to successful examples like Binance and Axie Infinity, where alignment between founders, employees, customers, and investors has driven satisfaction and success. Circle’s decision to favor TradFi institutions over crypto-native firms, he argued, was a short-sighted move that undermines the industry’s core values.

Circle’s Perspective: Silence Amid Criticism

As of publication, Circle has not publicly responded to Dorman’s accusations. The company’s decision to allocate shares to TradFi institutions may have been driven by strategic considerations, such as ensuring strong demand and liquidity for its IPO. However, the lack of transparency and communication has fueled frustration among crypto-native stakeholders.

What’s Next for Arca and Circle?

Arca’s decision to sever ties with Circle and shift to rival stablecoins like USDT raises questions about the future of USDC’s adoption and Circle’s reputation within the crypto community. The upcoming 13F filings will reveal the institutional investors who benefited from Circle’s IPO, potentially shedding light on the company’s allocation strategy.

FAQs

Why did Arca sever ties with Circle?

Arca’s Chief Investment Officer, Jeff Dorman, criticized Circle for favoring TradFi institutions over crypto-native firms during its IPO allocation process. Arca received only 1.35% of its requested shares, prompting the firm to close its accounts with Circle.

What is the significance of Circle’s IPO?

Circle’s IPO marked a major milestone for the crypto industry, as the issuer of USDC gained access to traditional finance’s capital markets. The IPO raised $1.05 billion, with shares surging on the first day of trading.

How does this controversy impact USDC?

Arca’s decision to stop accepting USDC and shift to rival stablecoins like USDT could impact USDC’s adoption and Circle’s reputation within the crypto community.

What are the broader implications for the crypto industry?

The controversy highlights the tension between crypto-native firms and TradFi institutions, as well as the challenges of maintaining alignment of interests in the industry.

Conclusion: A Turning Point for Crypto

The Arca-Circle fallout serves as a wake-up call for the crypto industry, emphasizing the need for transparency, alignment of interests, and mutual respect between stakeholders. As the industry continues to evolve, the lessons from this controversy could shape future interactions between crypto-native firms and TradFi institutions.

Aviso
Este contenido se proporciona solo con fines informativos y puede incluir productos no disponibles en tu región. No tiene por objeto proporcionar (i) asesoramiento en materia de inversión o una recomendación de inversión; (ii) una oferta o solicitud de compra, venta o holding de activos digitales; ni (iii) asesoramiento financiero, contable, jurídico o fiscal. El holding de activos digitales, incluidas las stablecoins, implica un alto grado de riesgo ya que estos pueden fluctuar en gran medida. Debes analizar cuidadosamente si el trading o el holding de activos digitales son adecuados para ti teniendo en cuenta tu situación financiera. Consulta con un asesor jurídico, fiscal o de inversiones si tienes dudas sobre tu situación en particular. La información (incluidos los datos de mercado y la información estadística, en su caso) que aparece en esta publicación se muestra únicamente con el propósito de ofrecer una información general. Aunque se han tomado todas las precauciones razonables en la preparación de estos datos y gráficos, no se acepta responsabilidad alguna por los errores de hecho u omisión aquí expresados.

© 2025 OKX. Este artículo puede reproducirse o distribuirse en su totalidad, o pueden utilizarse fragmentos de 100 palabras o menos de este artículo, siempre que dicho uso no sea comercial. Cualquier reproducción o distribución del artículo completo debe indicar también claramente lo siguiente: "Este artículo es © 2025 OKX y se utiliza con permiso". Los fragmentos permitidos deben citar el nombre del artículo e incluir su atribución, por ejemplo "Nombre del artículo, [nombre del autor, en su caso], © 2025 OKX". Algunos contenidos pueden generarse o ayudarse a partir de herramientas de inteligencia artificial (IA). No se permiten obras derivadas ni otros usos de este artículo.

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