Circle has won an arbitration case against the Tether-linked fund Heka Funds, according to a report. The stablecoin issuer had suspended the fund in late 2023 over suspected market manipulation, after which Heka sought USD 49 million in damages without success.
Circle is the issuer of the USDC stablecoin and has traded on the NYSE under the ticker CRCL since June 2025. As the platform operator, the company also controls access to its services and can suspend accounts when it suspects abusive trading behavior. In late 2023, Circle reportedly suspended the fund Heka Funds. Its trading patterns pointed to a deliberate preference for the rival stablecoin USDT, according to the report. Heka Funds then launched arbitration proceedings in 2024. However, the details and the outcome in Circle's favor only became public in mid-July 2026.
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Suspicious trading patterns favoring USDT
Conspicuous trading patterns at the fund triggered the suspension, according to the report. These allegedly favored the competitor Tether in a targeted way. Circle therefore saw this as behavior that came close to market manipulation in favor of USDT. For an issuer, this is no side issue. It touches the integrity of its own ecosystem. As a result, the company withdrew the fund's access to its platform in late 2023.
For a stablecoin issuer, such a suspicion is delicate. A token's credibility rests on a stable peg and on market trust. Stablecoins are meant to be redeemable one-to-one against the underlying dollar at any time. This makes coordinated trading patterns especially sensitive. Once trust wavers, a stablecoin risks drifting from its target price and driving investors away.
The USD 49 million damages claim
Heka Funds refused to accept the suspension. The fund therefore launched arbitration proceedings in 2024 and demanded USD 49 million in damages. It justified the sum with lost profits it claimed to have suffered from being excluded from the platform. For a fund specialized in stablecoin arbitrage, losing access to a large issuer directly means lost trading opportunities. Access to Circle's infrastructure was therefore of considerable value to its business model.
The arbitrator, however, ruled in Circle's favor and dismissed the claim. As a result, the issuer did not have to pay the demanded damages. The exact date of the ruling is unknown. The details only became public on July 14, 2026. Arbitration is regarded in the financial industry as a confidential alternative to public court trials. This is why details, as in this case, often emerge only with a delay. In such proceedings, a privately appointed arbitrator decides instead of a state court. The ruling binds both sides and can be challenged only to a limited extent.
An official statement from Circle, Tether, Heka Funds or its manager Abraxas Capital is not yet available. Moreover, the entire account rests on a single report, which is why individual details should be treated with caution. Without statements from those involved, it remains open for now how the arbitrator assessed the accusations in detail. The dispute therefore ends in favor of the USDC issuer for now.
Circle's suspension hit Heka Funds hard
Behind Heka Funds stands an investment company registered in Malta. Officially, it operates as Heka Funds SICAV p.l.c. with the sub-fund Elysium Global Arbitrage Fund. Malta is furthermore regarded as an established location for regulated fund structures within the EU. The London-based asset manager Abraxas Capital Management runs the vehicle and is responsible for its trading strategy.
Originally launched in late 2018, the fund specializes in stablecoin and Tether arbitrage. Arbitrage funds exploit small price differences between trading venues or between individual stablecoins to generate systematic profits. Only a thin margin arises per transaction, which is why the business works mainly through high volume and fast settlement. When a central trading partner drops out, the achievable return falls noticeably, because the number of usable trading routes shrinks. Access to the issuance and redemption channels of the large issuers is therefore central to this strategy. Over the years, the fund grew into one of the largest institutional buyers of Tether's USDT.
According to a Protos investigation using data from 2021, it held at times up to EUR 540 million (around USD 570 million) in stablecoins. These were split across USDC and USDT. Since inception, the fund had furthermore posted a cumulative gain of over 100%. For 2021, it booked an annual profit of around EUR 49 million. This figure happens to resemble the later damages claim, but concerns a different matter from a different year. The manager Abraxas Capital itself, by contrast, recorded barely USD 5.8 million in profit that same year.
Stablecoin competition between Circle and Tether
Circle and Tether are the two dominant stablecoin issuers worldwide. Measured by market capitalization, USDT remains by a clear margin the larger of the two providers. Circle has traded on the NYSE under the ticker CRCL since June 2025. As a listed company, the issuer faces greater regulatory scrutiny and moves closer to supervisors than its rival Tether.
The GENIUS Act is intended to create a federal framework in the US for regulating stablecoin issuers. Such a framework would enforce uniform rules on reserves, audits and disclosure. In addition, the question of possible interest payments on stablecoins raises the regulatory pressure. For issuers like Circle, a clear legal framework increases the value of a clean compliance record over less transparent competitors.
The case shows how platform governance becomes a competitive tool between the two largest players. Market surveillance and access suspensions are therefore not only a compliance duty for an issuer, but also a lever against the competition. Access rules also help decide which market participants preferentially move which stablecoin. An issuer thereby indirectly steers how liquid its token remains compared with the rival. Exclusion from the platform hits an arbitrage fund directly in its core business. For Circle, the case ultimately bundles two interests, namely market integrity and competitive advantage.
