Furious Arca Dumps Circle Shares After Disastrous IPO Allocation
In a significant development shaking the crypto investment world, digital asset management firm Arca has decided to sell all of its shares in stablecoin issuer Circle. This move comes on the heels of Circle’s recent public listing and a public outcry from Arca’s chief investment officer, Jeff Dorman, regarding the allocation received during the Circle IPO.
Why Did Arca Sell Its Circle Shares?
The decision by Arca to divest from Circle was triggered by what Jeff Dorman described as a “throwaway” allocation in Circle’s initial public offering. Despite being a long-term supporter and submitting a substantial order, Arca received a minuscule portion of the shares they requested.
- Arca submitted an order for $10 million worth of Circle shares in April 2025.
- They were allocated only $135,000 worth of shares.
- This minimal allocation, representing just over 1% of their requested amount, came despite Arca being an early and consistent supporter.
Dorman voiced his frustration in a now-deleted open letter, criticizing Circle for not being transparent about the likely allocation size earlier in the process. He felt the lack of communication wasted his team’s time and effort on a deal that Circle apparently had no intention of allocating significantly to Arca.
The Fallout: Cutting Ties and Ditching USDC
The dispute over the IPO allocation has led to a complete breakdown in the relationship between Arca and Circle. Beyond selling the shares, Arca is taking further steps to distance itself from the stablecoin giant.
Jeff Dorman stated that Arca is closing all its accounts with Circle. More significantly, he announced that Arca would no longer accept USDC, Circle’s widely used stablecoin. This is a bold move, given USDC’s prominence as the second-largest stablecoin by market capitalization.
Arca plans to inform its network of dealers and counterparties that it will no longer transact using USDC. This could have implications for Arca’s operations and potentially influence other firms, although the full impact remains to be seen.
Circle’s NYSE Debut and Stablecoin Significance
Circle’s listing on the New York Stock Exchange (NYSE) under the ticker CRCL on June 5 was a major event for the crypto industry. As the issuer of a dominant stablecoin like USDC, gaining access to deep public capital markets is a significant step for the company.
The IPO successfully raised $1.05 billion. Following its debut, Circle’s stock price saw a substantial surge, closing its first day up 167% at $82 and continuing to climb the following day, trading around $115.
While the market reacted positively to Circle’s public offering, Arca’s public criticism highlights potential friction points between the stablecoin issuer and some institutional investors, particularly those who felt slighted during the IPO process.
What Does This Mean for Arca and the Market?
Arca’s decision underscores the importance of fair and transparent allocation processes, especially in high-profile IPOs within the crypto space. For Arca, this means seeking alternative stablecoin solutions or adjusting its operational workflows to accommodate the absence of USDC.
For the broader market, this event serves as a reminder that even major players like Circle face scrutiny from investors. While Circle’s IPO was successful financially, public disputes like this can impact relationships within the ecosystem.
Conclusion
The public fallout between Arca and Circle, culminating in Arca selling its shares and pledging to abandon USDC, stems from a contentious IPO allocation. Arca’s CIO, Jeff Dorman, felt the firm was unfairly treated despite its support. This incident, while specific to Arca, sheds light on the dynamics between crypto companies going public and their early institutional backers. As Circle navigates the public markets, managing investor relations and perceptions will be crucial, especially following such public criticism from a known industry player like Arca.
