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Highlights
- Circle employees lost $3 billion due to traditional IPO route despite mega debut, stated billionaire Chamath Palihapitiya.
- Palihapitiya criticized traditional IPOs for transferring value to intermediaries through opaque processes.
- He emphasized that SPAC mergers and direct listings disclose and negotiate value transfers upfront.
The Circle (CRCL) stock surged an additional 20% on Friday, and is already up by 700% since its IPO earlier this month. Despite these massive gains, billionaire investor Chamath Palihapitiya noted that the stablecoins firm’s employees lost nearly $3 billion, as the company had to go for a traditional IPO route instead of SPAC merger. This is because the company employees have to sell 14.4 million shares from their holdings to proceed with the IPO.
Circle Employees Lose A $3 Billion Fortune
With the staggering 700% CRCL stock rally since its IPO, USDC stablecoin issuer Circle has reached close to $50 billion with 15 days of its IPO, conducted at a valuation of under $8 billion. This massive rally comes on the backdrop of the GENIUS Stablecoin Act, which proceeds to the US House for final approval.
However, Chamath Palihapitiya said that Circle employees lost a major portion of this traditional IPO route, while questioning this traditional public listing method, and comparing it to SPAC merger. In his recent post on X platform, Palihapitiya said that during the entire IPO process, employees had to shed a total of 14.4 million shares at $31 per share, worth $450 million.
However, with the stablecoin firm hitting $3.456 billion on the debut of the public listing, they lost nearly $3 billion in this process. Palihapitiya said that this is why he prefers SPACs over traditional IPOs.
The billionaire added that value is transferred to intermediaries in SPACs and direct listings, but at least it’s disclosed upfront and negotiable. In traditional IPOs, banks use opacity to reward their best customers with free stock.
“In this case, it was a $3B gift from the employees and investors of Circle to people they don’t know, will never know and have nothing to do with their journey,” wrote Palihapitiya.
Justin Sun’s Tron Makes A Smart Move
Earlier this week, Tron founder Justin Sun announced his decision to go public through an SPAC merger with SRM Entertainment, while bypassing the entire IPO process.
The Nasdaq-listed SRM Entertainment will merge with Tron Group in a deal that will lead to a corporate rebranding of the latter as “Tron Inc.” Sources reveal that Dominari Securities, a boutique investment bank with ties to former U.S. President Donald Trump, will manage the reverse merger. Upon going public, the newly rebranded entity plans to launch a Tron Reserve.
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