An arbitrator ruled in Circle's favor in February 2026, rejecting a roughly $49 million lost-profits claim from Heka Funds and awarding the stablecoin issuer $166,643.25 in expert fees. Circle has now petitioned a U.S. federal court in Massachusetts to confirm the award, a move that underscores the power stablecoin issuers hold over primary market access.
The arbitration ruling
The arbitrator sided with Circle on all counts, dismissing Heka's claim that the company's decision to cut redemption limits and eventually suspend its account caused the fund to lose profits. Instead, the arbitrator found that Circle acted within its contractual rights. The $166,643.25 award covers expert fees Circle incurred during the proceedings.
Circle filed its petition to confirm the award on July 6, 2026, in the U.S. District Court for the District of Massachusetts, case number 1:2026cv13095. Confirmation would turn the arbitration decision into a court judgment, making it enforceable under federal law.
How the dispute unfolded
During the March 2023 Silicon Valley Bank de-peg, Circle allowed Heka to redeem more than $587 million in USDC. That was a lifeline for the fund, which needed to exit positions as the stablecoin briefly traded below $1. But by November 2023, Circle had reduced Heka's redemption limits to zero. On December 1, 2023, it suspended the account entirely.
Heka argued that the sudden cutoff cost it nearly $49 million in potential profits. The arbitrator disagreed, effectively backing Circle's discretion to manage primary market access based on its own risk assessment.
Tether's role
Heka wasn't solely a USDC shop. Tether had invested roughly $800 million into Heka's Elysium arbitrage fund, representing about 75% of the fund's assets at the time of arbitration. Tether also waived USDT minting fees for Heka, a significant concession. The case reveals how heavily some funds rely on a single issuer — and how quickly that access can change.
What this means for stablecoin users
Stablecoins operate on two planes: the secondary market, where users trade peer-to-peer, and the primary market, where issuers control minting and redeeming. This case highlights issuer discretion over primary access as a real risk for funds with concentrated backing or strategies sensitive to monitoring and compliance flags.
For operators looking to avoid a similar squeeze, the article offers a playbook: use multi-issuer rails, pre-negotiate limits, and stress test for scenarios where an issuer pulls the plug. The lesson is that even a fund with hundreds of millions in redemptions can find itself locked out.
Circle's petition now awaits a judge's decision. The court will decide whether to confirm the award, and if so, Heka will owe the $166,643.25 plus any additional costs. The larger question — how much discretion an issuer has over primary market access — remains unresolved, but this ruling gives Circle a strong precedent.
