Arc Token Sell-Off Amid Indian Stereotyping Claims

Tokens listed on Circle's new Arc blockchain have fallen over the past 24 hours. Traders cited that a builder appearing in the mainnet launch live stream looked like an Indian and sold tokens based on this observation. The individual shown in the video is not a Circle employee.

Panchu Vijay Pal operates XyloNet, his stablecoin exchange platform. Circle introduced XyloNet as a partner in June. Traders sold tokens falsely linked to Pal, claiming they were part of chains featuring BlackRock, Visa, and Mastercard as block producers.

Circle opened Arc's public mainnet in New York on Wednesday. The main stage featured CEO Jeremy Allaire's keynote, panels with BlackRock, DTCC, and Aave, and a developer pre-program highlighting partners and community engagement. Pal appeared during the developer pre-program, filmed from his home office with a gaming chair visible. Screenshots of this segment spread rapidly on social media platform X within an hour, prompting trader KR to announce selling to 764,000 followers.

The falling tokens are launchpad and meme coin assets not issued by Circle. ARC token trading has yet to begin. According to CoinGecko Terminal data published Thursday, TOLLY dropped around 68% and ARGUS fell approximately 50%.

Traders had prepared positions for a meme coin surge on Arc over recent weeks. The launchpad recorded 82% of the chain's first-day DEX volume at $41.8 million. The initial sell-off was not due to fundamental reasons but rather based on appearance.

Comments under the video escalated from mockery to dehumanizing attacks targeting all Indians. Crypto opinion leader "Crypto with Khan" published a rebuttal listing successful Indian CEOs at Google, Microsoft, IBM, and Adobe. Alphractal founder Joao Wedson cited this view in a longer response.

Khan also shared a ranking of top countries for crypto scams over the same day, claiming it was generated via an AI chatbot. FTX, PlusToken, OneCoin, and Africrypt topped the list. However, no dataset categorizes crypto scammers by nationality. Chainalysis' 2026 cryptocurrency crime report states that North Korean hackers stole over $2 billion in 2025, including a $1.5 billion Bybit hack.

Circle's Arc team highlighted XyloNet as an exemplary project during its June partner spotlight. Yet on launch day, traders used Pal's appearance as a reason to sell tokens falsely linked to him. Both groups were part of the same audience for Circle's event.