Circle, the stablecoin issuer, has found itself in the crosshairs of Jeff Dorman, the chief investment officer at Arca, a digital asset investment firm. Dorman unleashed an expletive-laden open letter expressing his displeasure over what he considered a paltry allocation of shares in Circle's recent initial public offering (IPO).
Arca, according to Dorman, was granted a mere $135,000 participation in the IPO, despite placing an order for $10 million worth of shares. This, Dorman argued, was particularly galling considering Arca's early support for Circle and its long-standing relationship with the company. In his scathing letter, Dorman accused Circle and its leadership of poor judgment, deeming the allocation "inappropriate" and announcing the immediate closure of all Arca's accounts with the stablecoin issuer.
Dorman emphasized Arca's history as one of Circle's earliest backers, highlighting the firm's unwavering support even when rumors of IPO delays circulated due to macroeconomic headwinds. His letter conveyed a sense of betrayal, stating, "Arca has been through hell and back like every other crypto-native firm for the last eight years. Most of us stick together and help each other. I cannot believe our efforts to help you grow for years culminated in you giving us a joke, throwaway allocation. You are the first and only crypto company that has ever treated Arca this way."
The Arca CIO didn't hold back in his criticism, suggesting that Circle's behavior mirrored that of traditional finance ("TradFi") firms, the very entities Arca sought to distance itself from by entering the crypto space. "Most of Arca's management team left Wall Street eight years ago to start a crypto-native company specifically to get away from TradFi clowns like you. Ironically, you've come full Circle," Dorman wrote.
Beyond severing ties with Circle, Dorman indicated Arca would actively discourage other firms from partnering with the stablecoin giant, signaling a potential reputational blow for Circle within the crypto investment community.
Circle's IPO, which debuted on June 5 on the New York Stock Exchange (NYSE), was initially viewed as a landmark event for the cryptocurrency industry, with many considering it a sign of the sector's growing maturity. The company even upsized its IPO multiple times in response to strong investor demand. However, Dorman's public rebuke casts a shadow over the celebratory narrative, raising questions about Circle's relationship with its early supporters and its approach to allocating shares in its public offering. The incident underscores the tensions that can arise between established crypto firms and newer entrants as the industry evolves and attracts greater mainstream attention.
