FT: Circle previously banned Tether-backed crypto fund accounts, later supported by arbitration ruling
According to the Financial Times, according to the Financial Times, stablecoin issuer Circle blocked Tether-backed crypto fund Heka Funds at the end of 2023 due to suspicion that it manipulated the market through large-scale arbitrage operations and helped Tether expand its market share. Documents show that during the Bank of Silicon Valley (SVB) crisis in 2023, USDC once fell below the anchor price of $1. Heka continued to buy heavily discounted USDC and redeem dollar cash from Circle. Circle believes that Heka's redemption scale far exceeds that of other market participants, and doubts that the relevant funds will end up going to Tether to help it expand the size of the USDT market. The arbitration documents also revealed that Tether had invested around $800 million in Heka, accounting for about 75% of the fund's assets, and exempted stablecoin minting fees. The arbitrator found that Heka had not truthfully disclosed Tether's support relationship and knew that the information would raise Circle's concerns. In 2024, Heka filed an arbitration claim for approximately $49 million in lost profits due to the account being blocked. In February of this year, the arbitrators dismissed all of Heka's claims, found that it had acted in bad faith, and determined that it would pay Circle approximately $166,000 in attorneys' fees and expert fees. Heka denied market manipulation and said it has never been subject to regulatory scrutiny; Circle declined to comment, and Tether did not respond to media requests for comment.
