US circle company accuses SEC of being responsible for derailment of SPAC stock listing plan

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Merger Registration Notification Not Validated

Circle, which operates the stablecoin USDC, has failed to list on the stock market through a special purpose acquisition company (SPAC) due to the inaction of the US Securities and Exchange Commission (SEC). He blamed regulators for that.

According to a report by the Financial Times (FT), the main reason Circle’s IPO plan failed was not due to the turmoil and slump in the cryptocurrency market last year, nor to investor sentiment, but rather that the SEC has announced that the company’s “S-4 It claims that the merger with SPAC could not be completed within the contract period because it did not declare the registration “effective”.

An S-4 registration is a registration document that a company submits to the SEC to obtain approval for an initial public offering.

In July 2021, Circle announced plans to merge with SPAC’s Concord Acquisition Corp. and list on the New York Stock Exchange (NYSE). In February 2022, the company signed a contract with Concord under new terms, which doubled the company’s valuation from the initial ¥581.5 billion ($4.5 billion) to ¥1.163 trillion ($9 billion). rice field.

But in December last year, Circle announced that it was dissolving its plans to go public after failing to complete the merger within the deadline of the deal. The merger was contingent on the SEC validating the registration filing.

What is a SPAC (Special Purpose Acquisition Company)?

SPAC (Special Purpose Acquisition Company) is an abbreviation of “Special Purpose Acquisition Company”, and the company itself does not have a business and aims to acquire unlisted companies. In this system, the SPAC goes public first, then acquires the target company, and as a result, the acquired company goes public. Companies were able to go public without going through formal scrutiny, but there has been a recent trend toward increased regulatory scrutiny.

Cryptocurrency Glossary

Relation:US Circle to end SPAC listing plan

Opinion of Circle’s CEO

Meanwhile, according to Business Insider, a Circle spokesperson said the statement that the company was blaming the SEC for terminating the SPAC merger agreement with Concord was inaccurate. He said the deal had simply expired and was dissolved by mutual consent.

“The SEC has been rigorous and thorough in trying to understand Circle’s business and the many new facets of this industry,” Circle Chief Executive Jeremy Allaire said in announcing the demise of the planned listing. I think,” commented. He said it was necessary for cryptocurrency-related companies to provide credibility, transparency, and accountability.

The FT, citing a person familiar with the matter, noted that the SEC’s response was extremely slow between the announcement of Circle’s IPO plan and the liquidation (about 18 months). At the same time, the person said the collapse of FTX had exposed regulatory gaps and highlighted the scale of the damage, creating a situation where “nobody can approve anything.”

SEC stance

While the SEC has repeatedly postponed judgments in processes such as the approval of Bitcoin ETFs, it has sometimes taken abruptly and hardline approaches to the cryptocurrency market, such as the exposure of securities law violations.

Most recently, it announced that it had sued cryptocurrency giant Gemini and lender Genesis for violating securities laws. It alleges that Gemini Earn, a yield service provided by Genesis, constitutes an offering and sale of unregistered securities.

In response, Tyler Winklevoss, co-founder of Gemini, said he had been in discussions with the SEC for 17 months about the services that were subject to securities law violations. He said he regrets that the SEC has filed lawsuits instead of protecting investors without prior notice.

Relation:SEC sues Gemini and Genesis for securities violations

The SEC’s regulatory approach has been widely criticized for lacking clarity, and in December last year, a U.S. congressman called on Commissioner Gary Gensler to testify before Congress on the “costs of regulatory failure.” there is

While Gensler argued that most cryptocurrencies could be classified as securities, he has yet to clarify which ones are considered securities.

Relation:“Cryptocurrency regulation was a failure,” U.S. lawmaker asks SEC Chairman Gensler to testify before Congress

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