Lehman Brothers Bargain Hunter Bob Diamond Now Paying Up for Crypto

Bob Diamond made his reputation on Wall Street by boldly buying key assets from Lehman Brothers at a bargain price following the subprime mortgage crisis, back when he was the president of the giant British bank Barclays. Now he’s paying top dollar to try to replicate that success in the digital assets market.

His latest dramatic move – Diamond’s special purpose acquisition company (SPAC), Concord Acquisition Corp., agreed to double the valuation for U.S.-based stablecoin issuer, Circle – shows just how big the stakes are as Wall Street veterans place their bets on the future of finance.

Circle negotiated a new deal on Thursday with Concord that values the company at $9 billion, up from the initial agreement in July that valued it at $4.5 billion. The new deal reflects improvements in Circle's financial outlook and competitive position – particularly the growth and market share of USD coin (USDC), according to a statement announcing the re-valuation on Thursday.

In 2008, Diamond spearheaded Barclays' acquisition of some key assets of the embattled Lehman Brothers following the subprime mortgage crisis, which not only impressed Barclays’ shareholders but also made the bank a major player on Wall Street. Diamond resigned from his position in 2012 after Barclays was hit with a massive fine for trying to manipulate Libor interest rates.

The new Circle deal shows Diamond is now looking to replicate his success with Lehman Brothers in the digital assets business. "We continue to believe that Circle is one of the most interesting, innovative and exciting companies in the evolution of global finance and we believe it will have an historic impact on the global economic system," said Diamond, Concord's chairman, in the statement.

Circle was co-founded in 2013 by Jeremy Allaire, a technologist who has long seen the disruptive potential of the internet. In addition to issuing USDC in partnership with the Coinbase crypto exchange, Circle owns equity crowdfunding platform SeedInvest and for a time owned crypto exchange Poloniex until divesting it in October 2019. In 2018, the payment services firm achieved unicorn status after closing a Series E fundraising round that pushed its valuation to nearly $3 billion.

Circle’s new deal comes at a time when some other crypto companies that are aiming to go public are struggling to gain traction with investors when the broader crypto market pulled back from its peak last year. Recently, crypto mining companies such as Core Scientific and Rhodium Enterprises that were slated to go public in the first half of this year received pushback from investors and had to delay their deals due to volatile markets.

However, Circle’s new deal shows there is still an appetite for crypto firms that are set to make a mark across the wider crypto ecosystem, and Circle’s issuance of one of the world’s leading stablecoins certainly qualifies.

A stablecoin is a type of cryptocurrency whose value is tied to an outside asset, such as the U.S. dollar or gold, to stabilize the price. USDC was launched in 2018 and was developed in conjunction with Circle’s affiliated CENTRE consortium, of which Coinbase is also a part. The stablecoin is backed by cash and equivalents and short-duration U.S. Treasury bonds and is redeemable 1:1 for U.S. dollars.

“With the [U.S. Federal Reserve] dragging their feet on the digital dollar, they've left a wide gap for the private sector to capitalize on the issuance of stablecoins,” Mati Greenspan, founder of Quantum Economics, told CoinDesk. “Being backed by incumbent financial institutions, Circle's USDC coin is currently a clear leader in a rapidly growing market,” Greenspan added.

"Circle has made massive strides toward transforming the global economic system through the power of digital currencies and the open internet," said Allaire, Circle's co-founder and CEO in Thursday’s statement.

CORRECTION (Feb. 18, 20:51 UTC): A previous version of this story incorrectly stated that Circle still owns crypto exchange Poloniex.