SEC Subpoenas USDC Stablecoin Backer Circle

Circle Financial is under investigation by the U.S. Securities and Exchange (SEC), the payments company disclosed Monday.

Circle, a key supporter of the USDC stablecoin, said in a regulatory filing that it received an “investigative subpoena” from the SEC’s Enforcement Division in July. That subpoena requests “documents and information regarding certain of our holdings, customer programs and operations,” the filing said.

“We are cooperating fully with their investigation,” Circle said in the filing, which was issued as part of Circle’s plan to go public. In the documents, it didn’t elaborate on what the SEC’s investigation was focused on. Circle told CoinDesk late Tuesday it could not provide additional information.

The subpoena arrived one month after Circle began onboarding corporate USDC holders into its first high-interest yield product, Circle Yield. It pitched U.S. corporations on a “well regulated” crypto yield product in a subsequent announcement that boasted its licenses in Bermuda.

That was more than Coinbase, the other member of the USDC-issuing Centre Consortium, could tout when the SEC effectively iced the exchange’s planned lending program last month. The SEC has come out swinging at crypto this year, repeatedly arguing for more enforcement authority.

Circle first disclosed the investigation’s existence in an August filing that went largely unnoticed at the time.

It’s not the firm’s first disclosed run-in with the SEC as it prepares to go public in a special purpose acquisition company deal that values the company at $4.5 billion.

Circle said in August it agreed to pay the SEC over $10 million to settle charges that its one-time subsidiary, Poloniex, was operating as an unregistered digital asset exchange.

UPDATE (Oct. 6, 0:22 UTC): Adds that Circle declined to comment.