Acquiring the Axelar team but abandoning the tokens: Circle's "want people but not coins" sparks controversy

Original: Odaily Planet Daily

Author: Azuma

In the early morning of December 16, the stablecoin giant Circle officially announced the completion of a signed agreement to acquire the core talent and technology of the initial development team of cross-chain protocol Axelar Network, Interop Labs. This move advances Circle’s cross-chain infrastructure strategy, helping it achieve seamless, scalable interoperability on its core products such as Arc and CCTP.

This is a typical case of industry giants acquiring high-quality teams, seemingly a win-win situation. However, the key issue lies in—Circle explicitly stated in the acquisition announcement that this transaction only involves the Interop Labs team and its proprietary intellectual property, while Axelar Network, the Axelar Foundation, and the AXL token will continue to operate independently under community governance. Another contributing team of the original project, Common Prefix, will take over the relevant activities previously handled by Interop Labs.

In simple terms, Circle has acquired the original development team of Axelar Network but has publicly discarded the Axelar Network project itself and its token AXL.

Following this sudden news, AXL’s price plummeted in the short term, reaching around $0.115 as of approximately 10 a.m. today, a 15% drop in 24 hours.

Meanwhile, the special situation surrounding the acquisition—“people but no tokens”—and the resulting “equity vs. tokens” debate have sparked extensive discussion within the community. Supporters of this acquisition model and opponents each hold their own views, arguing endlessly.

Opposing viewpoint: a disguised RUG, Circle is reckless, only token holders are hurt…

The core force opposing this is mainly some VC firms, which is understandable—“I invested real money in the project tokens, holding a bunch of tokens, and now you’ve taken away the workhorse. What good are these tokens to me?”

Simon Dedic, founder of Moonrock Capital, commented: “Another acquisition, another RUG. Circle acquires Axelar but explicitly excludes the Foundation and AXL tokens. This is outright criminal. Even if not illegal, it’s morally wrong. If you are a founder planning to issue tokens: treat them like equity, or get lost.”

Mike Dudas, co-founder of The Block and 6MV, said: “To everyone who thinks this is a token vs. equity issue, I can tell you clearly, this is entirely Circle causing trouble. There are rumors that Circle’s VP of Corporate Development once told a co-founder of Axelar, ‘I don’t care about your investors,’ and bought the IP and team from under their noses without informing the investors. These IPs and teams are crucial for the launch of Arc.”

Lombard Finance founder Yu Tie posted a chart of AXL’s price movement and predicted: “Axelar’s core team has been bought by Circle, and AXL may now be worthless. The token has been issued for over three years, and the team’s rights have long been fully vested. But this outcome feels very uncomfortable: the team and/or investors sell their tokens for profit, while the tokens only generate benefits for the owners who hope to realize gains.”

Zach Rynes, a prominent figure in the ChainLink community, said: “This again exposes the ongoing conflict in the crypto industry between tokens and equity interests. The development team behind the protocol was successfully acquired, but the token holders who funded the project received nothing. The so-called continued independent operation under community governance is essentially the development team abandoning users for profit. If we want to attract user capital…”

Nicholas Wenzel, head of the SOAR ecosystem, stated: “Axelar tokens are heading towards zero, thank you all for participating. This is yet another acquisition where token holders get nothing, while equity holders profit handsomely.”

Supporters’ viewpoint: normal market behavior, tokens are inherently at the bottom of the capital structure

While opponents focus on the unfair treatment of token holders, supporters emphasize market rules regarding financing and acquisitions.

Jeff Dorman, Chief Investment Officer of Arca, believes Circle’s approach is reasonable and elaborates on the capital structure of corporate financing and the inherent disadvantages of tokens.

Companies raise funds through different levels of capital structure, which have clear priority orders—some layers are naturally ahead of others—secured debt > unsecured senior debt > subordinated debt > preferred stock > common stock > tokens.

History shows countless cases where the interests of one type of investor are achieved at the expense of another:

• In bankruptcy liquidation, creditors win at the expense of equity investors;
• In leveraged buyouts (LBOs), equity holders often profit at the cost of creditors;
• In take-under acquisitions, creditors usually have priority over equity;
• In strategic acquisitions, both creditors and equity holders can benefit (but not always);
• Tokens are often at the very bottom of the capital structure…

This does not mean tokens have no value, nor that they necessarily need some “protection mechanism,” but the market must recognize a reality: when a company is acquired at a low valuation, and its issued tokens are nearly worthless, token holders will not receive a “magical dividend” out of thin air. In such cases, the gains for equity are often realized at the expense of token losses.

Avichal Garg, co-founder of Electric Capital, also commented: “This is normal. If all future value is created by the team, then no company would pay returns to investors.”

Core Contradiction: What exactly are tokens?

Regarding the “people but no tokens” controversy surrounding Axelar and Circle’s acquisition, both sides seem to have their reasons.

Opponents’ anger is genuine: token holders took risks during the project’s most difficult phase, when liquidity and narrative support were most needed, yet they were completely excluded at the critical moment of value realization. As a result, the core team and intellectual property realized their value, while tokens were left in the vacuum of “community governance” narratives. The market’s direct vote via price has indeed deeply disappointed those who believe in token value.

Supporters’ reasoning also has practical validity: strictly speaking, tokens are neither debt nor equity within the capital structure. In the context of acquisitions and liquidations, they do not inherently have priority. Circle’s approach does not violate existing business rules; it simply calmly chooses the assets most valuable to itself.

The real core of the contradiction is not whether Circle is moral, but a long-standing industry question: what are tokens in legal and economic terms?

In a bright future, tokens are often pre-assumed as “quasi-equity,” endowed with expectations of future success; but in real scenarios like acquisitions, bankruptcies, and liquidations, they are quickly reduced to “non-privileged certificates.” This narrative-driven equity-like perception and the structural bottom layer are the root causes of recurring conflicts.

The Axelar acquisition may not be the last controversy of its kind, but it should serve as an opportunity for the industry to further reflect on the positioning and meaning of tokens—tokens do not inherently possess rights; only when institutionalized and structured will rights be recognized at critical moments. The specific implementation still requires all practitioners to explore and practice together.

(The above content is authorized for excerpt and reprint by our partner PANews. Original link | Source: Odaily Planet Daily)

Disclaimer: This article is for market information only. All content and viewpoints are for reference only and do not constitute investment advice. They do not represent the objective views and positions of Block. Investors should make their own decisions and transactions. The author and Block shall not be responsible for any direct or indirect losses resulting from investor transactions._

Tags: AxelarAXL,CIRCLE,Interop Labs,USDC,acquisition,stablecoin,cross-chain