The May raise put Circle’s valuation at $3.01 billion.
Though The Block says it could not determine how many shares are being sold currently at the discounted price, if the price reflects market, that would place the total value of Circle’s shares at around $705 million.
Circle was recently named as one of Forbes “Fintech 50” companies and was valued in that article at $3 billion.
An unnamed UK-based crypto hedge funder reportedly told The Block that low price on SharesPost may be resulting from a perfect storm of factors:
“[I] reckon it’s a combination of liquidity discount applied to private companies + crypto bear market + Circle getting absolutely killed on write down of acquisitions + bear market volumes.”
Circle acquired the crypto exchange Poloniex in 2018, but trade volumes there and elsewhere are reportedly way down. Notably, Circle acquired prominent US-based investment crowdfunding platform SeedInvest in late 2018 for an undisclosed amount.
Binance is still reportedly handling $520 million USD per day in crypto trades, but Poloniex handles less than $7 million- about 5 times less than it rival Coinbase, which does a reported $37 million USD per day in crypto trades.
Circle CEOs Jeremy Allaire and Sean Neville, however, recently wrote that business is strong at Circle’s over-the-counter trading desk, Circle Trade, which the founders say handled more than $24 billion in crypto trade volume despite bear market conditions in 2018.
The two also claim to have, “onboarded a record number of new institutional clients…(grown) our trading operations to 24/7 with coverage in the US, Europe and Asia, and added significant workflow improvements, including the launch of our RFQ Electronic API.”
Some commentators reportedly find the discounted Circle share offering baffling given those claims.
According to “an executive at a rival exchange,” news of Circle’s discounted share price:
“Doesn’t make sense at all. They have mentioned staggering volumes growth.”
Another crypto exchange executive added:
“Circle Trade is the biggest profit earner — could be the majority of profits…(but) the OTC space is generally getting more competitive, margins are down.”
Circle could not be reached for comment by press time.