Following a sales controversy, US fintech Carta withdraws from the secondary market business.

Summary:
In a Monday night blog post, Carta’s CEO, Henry Ward, announced the company’s decision to discontinue its involvement in secondary share trading. This move comes as Carta was expanding its services beyond managing startup investors’ information, including cap tables.

Carta Inc., a fintech firm specializing in startups, is discontinuing its involvement in the stock sale business following a controversy surrounding its use of customer data.

In a blog post on Monday night, Carta’s CEO, Henry Ward, announced the decision to cease operations in secondary share trading. This move was part of Carta’s expansion into the stock sale business alongside its core service of managing investor information and cap tables for startups.

The company faced criticism over the weekend for the integration of these two businesses. Startup CEO Karri Saarinen accused Carta of using cap table data to approach one of its investors for share sales, which Carta acknowledged as an “internal policy violation.” Ward apologized for the breach of trust in a weekend blog post, acknowledging the impact on three companies, including posts on X from Saarinen and other customers, including the CEO of AI startup Hugging Face.

In Monday’s post, Ward revealed that the majority of the company’s revenue, approximately $250 million annually, came from its cap table business, while secondary market trading contributed only $3 million a year. Ward admitted shortcomings in the secondary business and referred to it as his “greatest failure and disappointment.”

He emphasized the company’s commitment to prioritizing data privacy, stating, “It is our customers’ data, not ours.” Axios earlier reported news that the company was exiting the stock sale sector.

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