Watchdog Requests SEC Investigate Circle SPAC Merger for Misleading and Deficient Filings


Contact: Michael Clauw,, 202.780.5750

WASHINGTON, D.C. – Yesterday, Campaign for Accountability (CfA) asked the SEC to investigate stablecoin issuer Circle’s proposed SPAC. CfA’s complaint highlights numerous red flags: Circle recently settled with the SEC for $10.4 million for operating an unlicensed exchange, the SPAC failed to disclose Circle executives’ involvement in a lawsuit alleging investors were defrauded, the company repeatedly issued misleading statements about how it invests its reserves and its plans to become a bank, and Goldman Sachs’ potential conflict of interest.

Read the complaint.

CfA Executive Director Michelle Kuppersmith said, “Chairman Gensler has stated that both SPACs and crypto companies merit increased scrutiny. This deal, which mixes a dangerously opaque currency with a similarly opaque transaction is the worst of both worlds. The SEC must investigate to protect investor safety.”

Among the most glaring omissions in Circle’s SEC filings is the failure to mention CEO Jeremy Allaire’s history of alleged securities law violations. In 2003, a previous company Allaire co-founded, Allaire Corp., paid a $12 million settlement to resolve class action litigation accusing Allaire, his brother, and other Allaire officers of intentionally making misleading statements to keep the price of Allaire Corp. stock high while insiders offloaded shares in the company. In rejecting a motion to dismiss, a district court found credible allegations that Mr. Allaire, along with then-Allaire Corp executive and current Circle director David J. Orfao, “elected to dupe the investors, lying about [an Allaire Corp. product’s] progress and misleading the public.”

Circle has also made misleading statements surrounding its pursuit of a bank charter. In its most recent S-4, the company said it might pursue a charter, while also portraying that process as well underway, referring to “the company’s ongoing regulatory engagement to become a U.S. federally chartered commercial bank.” Recently, Mr. Allaire reiterated his imminent plans to apply for a bank charter, “hopefully in the near future.” These aspirational statements appear to be designed to convince potential investors that Circle is committed to full banking regulation, contrary to its actual record.

Goldman Sachs’s role in the Concord-Circle SPAC is another cause for concern. The firm wears at least three different hats in the pending transaction: Goldman has been investing in Circle and helping it raise capital since at least 2015, it’s Circle’s “financial advisor and co-placement agent” on the SPAC, and it is also invested in Concord Acquisition, and saw its stock in the latter spike in price by 25 percent in the months after the SPAC was announced. Perhaps signaling that Goldman itself is cognizant of its reckless approach, recent reporting revealed that the firm is backing away from future SPACs to distance itself from anticipated SEC scrutiny.

Circle’s disclosure omissions mirror past circumstances where the SEC has taken firm action. Last year, the agency charged parties to a SPAC with securities law violations for making misleading statements in public filings and failure to meet its due diligence obligations to investors. SEC Chair Gary Gensler noted the case “illustrates risks inherent to SPAC transactions, as those who stand to earn significant profits from a SPAC merger may conduct inadequate due diligence and mislead investors.”

Ms. Kuppersmith continued, “If the SEC determines that information in this deal has been improperly withheld, it has a duty to take appropriate enforcement action. Failing to do so would pose an immediate risk to the deal’s investors and send a message to those pursuing future SPACs that impropriety and recklessness are not barriers to personal profit.”

Campaign for Accountability is a nonpartisan, nonprofit watchdog organization that uses research, litigation, and aggressive communications to expose misconduct and malfeasance in public life and hold those who act at the expense of the public good accountable for their actions.