Circle wins legal fight over Hekas USDC minting and redemption account
Circle has secured a court-backed arbitration win after records made public in a Boston federal court detailed why the stablecoin issuer suspended Heka Funds $USDC minting and redemption services over suspected market manipulation involving Tether. Court filings submitted by Circle on Tuesday as part of its petition to confirm a February arbitration award said the company concluded the Malta-based arbitrage fund had failed to disclose Tethers role as its principal investor and reasonably suspected trading activity that could have manipulated the $USDC market. Retired judge Robert L. Dondero, who served as arbitrator, ruled in Circles favor on the remaining contract claims, finding the company acted within the rights granted under its agreements with Heka. Hidden Tether ties became central to the dispute At the center of the case was Heka Funds, managed by London-based Abraxas Capital Management, which opened a Circle account in January 2022 for its Elysium Global Arbitrage Fund. According to the arbitration record, Heka disclosed only investor Simon Grima during onboarding, while Tether had become the fund‘s dominant capital provider. Testimony from Heka founder Fabio Frontini showed Tether’s investment reached about $800 million by the time of arbitration, accounting for roughly 75% of Elysiums assets. Dondero concluded the omission was intentional and wrote