Circle Blames SEC for Collapse of $9B SPAC

Stablecoin company Circle says the SEC is to blame for its failure to go public.

The company told the Financial Times (FT) in an interview published Wednesday (Jan. 25) that the $9 billion deal was called off last year not because of the rocky cryptocurrency market, but because the Securities and Exchange Commission (SEC) had not approved it.

Reached for comment by PYMNTS, Circle objected to the characterization that it “blamed” the SEC for the end of this SPAC.

“As stated in December, 2022, the deal simply termed out. [CEO] Jeremy Allaire further stated on Twitter that the ‘SEC has been rigorous and thorough in understanding our business and many novel aspects of this industry,” a company spokesperson said.

As PYMNTS has reported, Circle called off plans to go public through a special purpose acquisition company (SPAC) merger in December.

The announcement came at a point when activity surrounding once-popular SPACs had dramatically cooled off, and soon after the implosion of the FTX exchange.

However, Circle told the FT that neither the crypto market nor investor attitudes toward SPACs were the cause of the deal’s demise.

“The business combination could not be consummated before the expiration of the transaction agreement because the SEC had not yet declared our S-4 registration ‘effective’,” the company said, referring to the registration document that companies must file to get the SEC’s approval to offer new shares.

Still, the company said it recognized the need for a rigorous review by the SEC.

“We never expected the SEC registration process to be quick and easy,” Circle said. “We’re a novel company in a novel industry.”

Circle isn’t alone in facing increased SEC scrutiny. As noted here Tuesday (Jan. 24), a report by The Wall Street Journal (WSJ) found that at least two other companies — Bullish Global and eToro Group — failed to get approval from the commission for their listings.

The WSJ report cites unnamed sources who say the SEC didn’t set out to block these companies from going public, though crypto firms say the pace of the regulator’s review slowed the process.

And while the company said that the broader crypto market wasn’t the cause of the deal’s demise, a source told the FT that the collapse of FTX “in my mind made it impossible for anyone to approve anything.”

The months since have seen a few high-profile SEC actions involving crypto companies, including the agency’s civil complaint against FTX founder Sam Bankman-Fried, which alleges his company had been fraudulent since its 2019 inception.

And earlier this month, the SEC charged Genesis Global Capital and Gemini Trust Company with offering unregistered securities.