- Circle won arbitration after defeating Heka Funds’ $49 million claim over its platform ban.
- Circle said Heka’s trading activity appeared designed to benefit Tether through market manipulation.
- The ruling exposed a dispute involving firms behind stablecoins in the $307 billion market.
Circle has prevailed in an arbitration dispute brought by a Tether-backed investment fund after the stablecoin issuer defended its decision to remove the fund from its platform over trading concerns. The ruling, which rejected a $49 million claim for alleged lost profits, has brought previously private details into public view and uncovered a dispute between two companies.
The case centered on Circle’s assessment that the fund’s trading activity appeared to influence market conditions in a way that favored Tether, prompting the company to block the fund from further access to its services.
Arbitration Ends in Circle’s Favor
The dispute involved Heka Funds, a Malta-based investment fund managed by London’s Abraxas Capital Management and backed by Tether.
According to the disclosed arbitration outcome, Circle concluded in late 2023 that Heka’s trading activity on its platform showed patterns it considered suspicious. The company ruled out that the activity appeared consistent with market manipulation that would benefit Tether, Circle’s largest competitor in the stablecoin sector.
Following that assessment, Circle barred Heka Funds from using its platform. Heka challenged the decision through arbitration in 2024, arguing that the ban resulted in approximately $49 million in lost profits. The claim sought compensation tied to the investment fund’s inability to continue operating through Circle’s platform after the restriction was imposed.
The arbitrator ultimately ruled in Circle’s favor, rejecting Heka’s claim and upholding the company’s decision to remove the fund from its platform.
Circle and Tether Rivalry Emerges Through Arbitration
The arbitration outcome has drawn concern because it involves two companies linked to the largest stablecoins currently in circulation.
USDT, issued by Tether, and USDC, issued by Circle, together account for most of the stablecoin market, which is valued at approximately $307 billion. While USDT remains the larger token by market cap, USDC holds a large share of the market, among institutional participants and in regulated financial environments.
The published arbitration details also outlined the different positions the two companies have taken regarding their operations. Tether has faced ongoing scrutiny over the transparency of its operations, while Circle has emphasized a compliance-focused approach and regularly publishes attestation reports regarding its reserves.
Related: Circle Wins Final OCC Approval for National Trust Bank
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