Investments

Sources: Circle slashes reported $250 million fundraising goal by $100 million

Quick Take

  • Crypto startup Circle reduced its reported fundraising goal by 40% to $150 million, according to sources 
  • The company also laid off around 30 employees, or 10% of its staff
  • The two moves coincide with the increasing pressure that over-the-counter trading desks face with compressed spread and more competition 

Crypto startup Circle’s revised fundraising goal is 40% lower than the $250 million it was reportedly set to raise in March, according to sources familiar with the matter. 

The confirmation of the new lower goal follows news of lay-offs at the company. Circle CEO Jeremy Allaire announced today on Twitter that the company has laid off 30 employees. Allaire said the layoffs are an attempt to cut costs, while the company itself “remains strong and healthy.” 

Sources, which include a former employee at the company and someone who reviewed its investment pitch desk, said the firm is seeking to raise $150 million, considerably less than the previous target of $250 million, as reported by The Information in March.

On Twitter, Allaire wrote that the 30 positions were “eliminated,” which could suggest there is no plan to refill them anytime soon. 

“We made these changes in response to new market conditions, most importantly, an increasingly restrictive regulatory climate in the United States,” said Allaire. “Circle remains strong and healthy, and we will continue to drive new product innovation and growth globally, working with jurisdictions that offer forward-looking policies regulating digital asset businesses, while we press for more balanced crypto policy in the U.S.”

According to Crunchbase data, the Boston-based company has raised a total disclosed amount of $246 million so far from Pantera Capital, Digital Currency Group and Bitmain, among others.

The firm also owns trading platform Poloniex, which announced on Monday that it has “geofenced” some crypto assets from U.S. customers due to regulatory uncertainty. Still, at the heart of Circle’s business is its over-the-counter trading operation. OTC crypto trading, once a star of the market for digital coins, has suffered headwinds as margins compress and new participants such as multi-dealer platforms enter the market for crypto trading. 

“It’s crazy to me how gung-ho the industry was on OTC,” one industry insider noted. “If you look at any other asset class they all move to exchanges or dark pools.”

However, the layoffs aren’t necessarily connected to OTC headwinds. 

“No one from the trade desk got cut,” one former employee said.

Circle declined to comment on the fundraising round, noting that its Circle Trade business is profitable and that Poloniex is set to add more clients in Q2 versus Q1. 

“Circle Trade is profitable, has seen $2 billion in notional volume year-to-date, and continues to sign on counterparties, which now number more than 200. High seven figure PNL,” the firm said.
 
“Poloniex has continued to add innovative assets (more than a dozen in the last year), new features (such as margin trading for non-US customers), and customers; Poloniex is on track to add 50% more customers in Q2 than in Q1,” it added. 

CoinDesk reported the lay-offs this afternoon.