Stablecoin Circle group has abandoned plans to go public in a $9 billion deal via a blank check company chaired by former Barclays CEO Bob Diamond, underscoring how successive crises have affected the sector. of cryptocurrencies.
The alliance, which was initially forged during the cryptocurrency bull market in July 2021 and expanded earlier this year, sought an assessment from $7.65 billion to $9 billion. Circle and Concord Acquisition, Diamond's US-listed special purpose acquisition vehicle, said on Monday they had "mutually agreed" to end the merger.
Circle's deal collapse comes after the failure of digital asset exchange FTX, which hit a crypto industry already under pressure from rising interest rates and a series of bankruptcies of big-name companies.
Concord had until December 10 to finalize the deal to buy Circle, something that would have led to the latter listing on the New York Stock Exchange.
“We are disappointed that the proposed transaction has expired; however, becoming a public company remains part of Circle's core strategy to enhance trust and transparency, which has never been more important,” said Jeremy Allaire, Circle CEO. Diamond He added that he would "continue to be an advocate for the company as it continues to grow."
Circle's USD Coin is the second-largest stablecoin in the crypto market, with a valuation of around $43 billion, according to Circle data, falling from over $55 billion in June 2022 after investors pulled out. of the crypto market.
Stablecoins play a key role in connecting the traditional and crypto markets, with most tracking the value of a major currency like the dollar. Cryptocurrency traders use them as cash between bets. Stablecoin traders typically earn interest on the traditional assets underlying their tokens, with increased supply in circulation increasing revenue. The group said Monday it posted $43 million in net income in the third quarter of this year on revenue and interest income of $274 million.
Many publicly traded groups in the crypto industry have come under heavy pressure this year. Shares of US-listed Coinbase are down about 80 percent in 2022, while shares of Mike Novogratz's Galaxy Digital investment group are down 81 percent this year.
A broader market turmoil has hit other key players in the crypto industry, including broker Genesis, which halted withdrawals from its lending plan last month, and lending platform BlockFi, which followed FTX into bankruptcy.
Days after FTX's bankruptcy, Circle said it had minimal exposure to FTX and sister trading firm Alameda Research. In early 2021, the company made a $10 million equity investment in FTX and a $600,000 investment in FTX US.
