Circle's Axelar Deal Sparks AXL Crash and Token-Equity Backlash
Key Highlights AXL dropped sharply after Circle acquired Axelar-linked Interop Labs, sparking backlash from token holders on X. The deal excluded the Axelar Foundation and AXL token, intensifying criticism...
Key Highlights
- AXL dropped sharply after Circle acquired Axelar-linked Interop Labs, sparking backlash from token holders on X.
- The deal excluded the Axelar Foundation and AXL token, intensifying criticism over “token vs equity” conflicts.
- Influential crypto voices questioned governance, incentives, and whether AXL holders were left behind.
Axelar’s AXL token slid sharply on Tuesday after Circle confirmed it would acquire the core team and proprietary intellectual property of Interop Labs. The announcement sparked immediate pushback on X, where traders and developers questioned how the move would affect token holders, who are essentially the backbone of the project.
Circle said the transaction excludes the Axelar Foundation and the AXL token, which will continue under community governance. Still, the sell-off and online reaction showed many investors remained skeptical, framing the deal as another flashpoint in crypto’s ongoing debate over incentives, ownership, and the gap between tokens and equity.
Circle’s Axelar-linked acquisition sparks backlash
Circle said the deal, expected to close in early 2026, covers only Interop Labs’ team and proprietary IP to accelerate development of its Cross-Chain Transfer Protocol (CCTP) and Arc blockchain. Axelar, the Foundation, and the AXL token will continue operating independently under community governance, with Common Prefix taking Interop Labs’ former responsibilities.
However, that clarification did little to calm investors. Many AXL holders argued that Interop Labs was effectively the protocol’s core builder, making the separation between “team” and “token” feel artificial. The backlash unfolded largely on X, intensifying within hours of the statement.
“Token vs equity” narrative takes over X
Chainlink advocate Zach Rynes, known as ChainLinkGod, described the situation as “yet another example of the token vs equity conflict of interest problem plaguing crypto.” He argued that token holders who funded development were left with nothing, while the team secured a successful exit.
— Zach Rynes | CLG (@ChainLinkGod) December 15, 2025Yet another example of the token vs equity conflict of interest problem plaguing crypto
Dev team behind a protocol get successfully acquired, tokenholders who funded that team get nothing
"continue to operate independently under community governance" = dev team rugging you for… https://t.co/FcbGt9vCFe pic.twitter.com/tFe3VASJqx
Jacob Phillips, co-founder of Lombard Finance, echoed the sentiment, posting that Axelar’s “core team” being acquired made AXL “likely worthless,” noting that the token launched more than three years ago and the team was already fully vested.
— Jacob Phillips (@JacobPPhillips) December 12, 2025Great 2025 trend: Tokens fighting for ownership
Big thing still missing: "Related Entities" clauses with Founding Teams — a tactic commonly used by VCs to ensure value cannot be diverted by teams working on other projects.
For Tokens/DAOs, the team is most of the value. https://t.co/9emN60fsv9 pic.twitter.com/MngTGDZvLD
Phillips later expanded on the issue, pointing to the absence of “related entities” clauses common in venture capital deals, which are designed to prevent teams from diverting value elsewhere. In token-based systems, he argued, the team itself is often the primary source of value.
Impact on trading
AXL’s price action reflected rising unease among investors. The token is trading near $0.109, down 14% over the past 24 hours and roughly 20% from its weekly high. At the same time, 24-hour trading volume jumped above 40%, according to CoinMarketCap, pointing to panic-driven trading rather than organic demand.
The episode has reignited a familiar argument in crypto: whether tokens can really capture value when the people building the protocol are free to cash out through equity deals that bypass token holders entirely.
For Axelar investors, the deal hit a nerve. Old doubts about governance and alignment resurfaced, with holders questioning what a token means when the core team exits through a corporate deal.
As the backlash continues to unfold on X, the AXL sell-off highlights a deeper industry dilemma: whether token-based ecosystems can preserve investor trust when teams are free to walk away through equity deals, leaving communities to carry the project forward.
Also read: Capital A Joins StanChart To Launch Ringgit Stablecoin Pilot
Delegate Your Voting Power to FEED DRep in Cardano Governance.
DRep ID: drep12ukt4ctzmtf6l5rj76cddgf3dvuy0lfz7uky08jfvgr9ugaapz4 | We are driven to register as a DRep by our deep dedication to the Cardano ecosystem and our aspiration to take an active role in its development, ensuring that its progress stays true to the principles of decentralization, security, and community empowerment.DELEGATE VOTING POWER!
