Circle, the second‑largest stablecoin issuer, banned Malta‑based Heka Funds in late 2023 after suspecting it was manipulating the market to benefit its arch‑rival Tether. The fund, managed by London‑based Abraxas Capital Management, was accused of redeeming USDC in volumes that could funnel proceeds back to Tether Batch.

Heka sued Circle in 2024, claiming a $49mn loss of profit, but the arbitrator sided with Circle. Arbitration decisions remain confidential, yet Circle has moved to make the documents public in a Boston federal court. The dispute centers on a $73bn USDC reserve shaken by the Silicon Valley Bank collapse, which caused the coin to dip below its $1 peg.

Circle feared that Heka’s arbitrage was structured with $800mn of Tether backing, a move that could give Tether an edge over its rival. The arbitrator noted Heka’s concealment of Tether’s investment and awarded Circle about $166,000 in legal costs.

The clash underscores the growing scrutiny of stablecoin issuers and their trading partners in the $307bn market for dollar‑pegged tokens.