Arca CIO Criticizes Circle Over IPO Allocation

Circle, the issuer of the second-largest stablecoin by market capitalization, has come under fire from Jeff Dorman, the chief investment officer at digital asset investment firm Arca. The criticism stems from a $135,000 allocation given to Arca during Circle's recent initial public offering (IPO), which Dorman deemed inappropriate and a poor reflection of Circle's leadership.

In an open letter posted on social media, Dorman expressed his discontent, stating that Arca was one of the first entities to make an offer and had been a steadfast supporter of Circle, even during rumors of delayed IPO plans due to macroeconomic shocks. Dorman highlighted that Arca's $10 million order was reduced to a mere $135,000 allocation, which he found insulting given Arca's long-standing support and the firm's early backing of Circle.

Dorman's letter was laced with strong language, accusing Circle of poor judgment and comparing its leadership to "TradFi clowns." He emphasized that Arca's management team had left traditional finance to start a crypto-native company, and Circle's actions were seen as a betrayal of that ethos. The letter concluded with Dorman announcing the closure of all Arca's accounts with Circle and discouraging other firms from partnering with the stablecoin giant.

Circle made its public debut on June 5, listing on the New York Stock Exchange. This event is considered a significant milestone for the crypto sector, as it opens up liquidity from traditional finance to the issuer of a major stablecoin. The controversy surrounding the IPO allocation highlights the tensions and expectations within the crypto community, where relationships and support are often crucial for growth and success.

Dorman's open letter serves as a stark reminder of the high stakes and competitive nature of the crypto industry. The incident underscores the importance of transparency and fairness in IPO allocations, especially for firms that have been long-standing supporters. The fallout from this controversy could have broader implications for Circle's relationships within the crypto community and its future partnerships.