Big Law Hitched Onto Crypto Darling Well Before 168% IPO Pop

In recent news, Circle Internet Group Inc., a stablecoin issuer, has made waves by successfully raising $1.1 billion in an initial public offering (IPO). This significant achievement not only highlights the increasing viability of cryptocurrency companies but also underscores their attractiveness as clients to leading law firms. The notable rise of Circle’s shares—168% on their first day of trading—emphasizes why legal advisory services in the crypto space are becoming increasingly lucrative.

Circle engaged the prominent law firm Davis Polk & Wardwell to navigate the IPO process. With legal fees amounting to $7.3 million as detailed in recent filings with the US Securities and Exchange Commission (SEC), Circle stands as a testament to the financial potential within the cryptocurrency sector. Following the IPO, shares initially priced at $31 soared to a high of $103.75 before settling at $83.23, granting Circle a market valuation of approximately $18.5 billion according to Bloomberg data.

Circle’s journey underscores a major transformation in the perception of cryptocurrency among law firms that previously held reservations about digital currencies. Legal expenditures related to cryptocurrency jumped significantly, with Circle’s fees increasing by $17.6 million in 2024, following a rise of $5.2 million in 2023. This rapid growth reflects an evolving landscape, where top legal practices are now heavily involved in providing counsel to crypto companies navigating regulatory challenges and operational complexities.

Notable law firms like WilmerHale, Wilson Sonsini, and Goodwin Procter have been pivotal in ensuring Circle’s robust legal standing. For instance, WilmerHale assisted the company in acquiring Hashnote Holdings LLC, which focuses on issuing US Yield Coin. Wilson Sonsini has been key in launching innovative projects such as the Circle Payments Network, designed to facilitate cross-border payments using regulated stablecoins. Additionally, Wilson Sonsini represented Circle in litigation concerning a customer’s claim of losing $1 million worth of stablecoins, which was dismissed in Circle’s favor.

Davis Polk’s involvement extends beyond the IPO; it previously helped Circle formulate a partnership with Nu Crypto Ltda., enhancing the product’s accessibility to Brazilian consumers. The firm has garnered recognition in the crypto arena, recently advising Trump Media & Technology Group Corp. on launching a suite of exchange-traded funds in collaboration with Crypto.com.

Moreover, Goodwin Procter has played a crucial role in Circle’s aspirations, offering guidance since the inception of the company. This includes involvement in a previous failed merger attempt with a special purpose acquisition company (SPAC) that valued Circle at $9 billion and participation in a $440 million funding round in 2021.

A growing legal battle has emerged surrounding Circle’s relationship with its former investment bank, Financial Technology Partners LP (FT Partners). Alleging wrongful termination, FT Partners is seeking substantial transaction fees associated with previous capital raises, as well as potential fees from the recent IPO. The fee structure claimed by FT Partners stipulates a tiered commission based on the scale of capital raised—ranging from 7% for general capital raises to escalating rates for larger corporate transactions.

In the face of these challenges, Circle has retained Bartlit Beck, a high-profile litigation boutique, to navigate the dispute. Notably, Circle’s CEO Jeremy Allaire is said to have been directly involved in the termination letter concerning FT Partners. While Circle has categorically disputed FT Partners’ fee claims, the acknowledgment of potential cash or equity payments signal the seriousness of the allegations, especially given that both parties agree that the financial stakes could be significant.

As Circle continues to expand within the crypto landscape, its story serves as a reflection of the larger legal and financial dynamics at play within the industry. The growing collaboration between cryptocurrency firms and prestigious law firms suggests that the future of digital currencies is not only promising but is also reshaping traditional practices in corporate law.

In conclusion, Circle Internet Group’s IPO and ongoing legal challenges exemplify the intricate relationship between cryptocurrency companies and leading legal experts. The surge in legal fees and the involvement of top law firms underscore the evolving landscape of cryptocurrency, as these companies transition from niche markets to major players in the global economy. As the industry matures, engagement with sophisticated legal counsel becomes not just beneficial, but essential for navigating regulations and maximizing growth potential in a landscape rife with both opportunities and risks.

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