Circle Cooperating With SEC Investigation
In a regulatory filing on Monday (October 2, 2021), Circle revealed that it was subpoenaed by the SEC back in July. Meanwhile, the company initially disclosed that it was under investigation by the US regulatory agency in a filing back in August.
However, Circle did not reveal why it was subpoenaed or give further details about the SEC investigation. An excerpt from the document reads:
“In addition, in July 2021, we received an investigative subpoena from the SEC Enforcement Division requesting documents and information regarding certain of our holdings, customer programs, and operations. We are cooperating fully with their investigation.”
The documents also mentioned a previous matter between the SEC and Circle’s former subsidiary, Poloniex. The cryptocurrency exchange allegedly operated a trading platform that facilitated the buying and selling of digital assets classified as securities.
According to the SEC at the time, the trading platform qualified as an exchange, going by the agency’s securities laws, as it
“provided the non-discretionary means for trade orders to interact and execute through the combined use of the Poloniex website, an order book, and the Poloniex trading engine.”
Furthermore, the US regulator stated that Poloniex failed to register as a national securities exchange, which was in violation of Section 5 of the Exchange Act. While Poloniex did not deny or affirm the allegations by the SEC, the company agreed to pay approximately $10.4 million in fine, which included a civil monetary penalty, disgorgement, and prejudgment interest.
Circle’s Plan to go Public
Meanwhile, the filing also included the Circle’s plan to go public on the New York Stock Exchange (NYSE), via a merger with a special purpose acquisition company (SPAC). Back in July, the firm stated that it would partner with Concord Acquisition Corp, a deal that puts Circle’s valuation at $4.5 billion. The transaction is expected to be completed in the fourth quarter of 2021.
In July, Circle released an attestation report giving the breakdown of assets backing the USDC stablecoin. According to the report, 61% of USDC’s reserves were held in cash and cash reserves, with 13 percent held in Yankee Certificate of Deposits (CDs). Others were in US Treasuries, corporate bonds, and commercial paper.
A month earlier, the company launched the Circle Yield program, following approval from the Bermuda Monetary Authority (BMA). The company noted that under a regulatory environment, the product would provide
“an early access period to institutional investors to leverage yield generation opportunities in a sage, sound and compliant manner in support of high growth digital assets and crypto markets.”
However, major cryptocurrency exchange, Coinbase, a co-founder of the Center Consortium along with Circle, announced that it was not going to launch its planned USDC APY lending program. The decision came after the SEC threatened the sue Coinbase if the company went ahead with the crypto lending program.
