A number of planned mergers between crypto and web3 companies with special purpose acquisition companies (SPACs) are being delayed or canceled as a result of the recent market rout.
SPACs, also known as blank-check firms, are publicly traded shell companies created with the sole purpose of taking private firms public. Although SPACs have a reputation for being a backdoor way of going public, they rose to prominence during the pandemic-driven market boom. In 2021, SPAC deals peaked at 81 deals totaling $155.43 billion.
They became particularly appealing to crypto firms, whose unique business models could pose challenges to getting listing approval through traditional routes of going public, such as an initial public offering. In total, 14 firms such as metaverse infrastructure company InfiniteWorld, crypto mining companies CoreScietific, Cipher Mining and Bakkt, and USDC
However, only five of 14 deals announced since have actually gone through as the market for SPACs crashed with the market reversal.
This week saw more fallout.
Equities and stock broker eToro announced the termination of its agreement with FinTech V, a SPAC that would have taken the company public at a $10 billion. The parties failed to meet the June 30 deadline stipulated in the initial agreement, and cited “circumstances outside of either party’s’ control” as the reason for termination. eToro maintains that their “balance sheet is strong,” per the termination announcement.
Forbes is also amongst the companies who announced planned SPAC deals that terminated the agreement. The media company had previously announced its intention to go public in a deal with Magnum Opus Acquisition, a Hong Kong-based SPAC, but the firms mutually announced that they were terminating the deal in June of this year.
Other SPACs have pursued extensions to give them more time to complete the transaction, or perhaps renegotiate certain terms such as the valuation. One company worth paying close attention to is Circle, the primary issuer of the USDC stablecoin, a dollar-based token with a $55.57 billion market capitalization. USDC has risen to prominence following the collapse of UST
The company announced a merger with Concord Acquisition Corp with the intention of going public in July of last year. The companies then signed an extension in February that doubled Circle’s valuation from $4.5 billion to $9 billion.
“Regarding the deal which was originally announced in July 2021 and updated in February, 2022, we continue the review process of our S4 registration statement with the SEC,” a Circle spokesperson told Forbes. The companies filed an extension of the agreement until December 10, 2022.
Bullish Global, the Peter Thiel-backed crypto exchange that made headlines last year for also being valued at $9 billion, is amongst those who have extended termination deadlines with their respective SPACs and laid off about 10% of its staff earlier this week. The Cayman Islands-based company announced a planned merger with Far Peak Acquisition in July of 2021. Though the initial listing was due to come on July 8, Bullish and Far Peak extended their outside termination date to December 31, 2022.
Other exchanges that also have termination dates for planned mergers with SPACs include Japanese crypto exchange Coincheck and New York-based digital asset trading platform Apifiny Group.
Several crypto mining companies were also eyeing public listing through SPACs. PrimeBlock, BitFuFu and Griid Infrastructure are among those that announced SPAC mergers in the past year and have extended their termination deadlines.
Additionally, Bitdeer, a cryptocurrency cloud mining company backed by the largest crypto mining rig manufacturing company Bitmain, and Blue Safari Acquisition extended their termination deadline until September 14, 2022.
“While we are unable to comment on the specifics of our transaction, what we can share is that we are confident in our business model, and our listing plan is in process. We look forward to sharing further updates as possible,” a Bitdeer Spokesperson told Forbes.
Bitmain is also the parent company of BitFuFu, another crypto mining company who expects to go public in a deal with Arisz Acquisition Corporation in Q3 of this year.
Finally, Griid Infrastructure, a bitcoin carbon-free mining company, was initially expected to close its merger with Adit EdTech Acquisition Corp in Q1 of this year, yet the company has not yet been publicly listed. Neither Griid Infrastructure of Adit EdTech responded to Forbes request for comment.
However, market uncertainty doesn’t seem to be affecting the prices of the SPACs involved in the deals, as stocks for the publicly listed SPACs have been relatively stable, fluctuating between 1-3% since the beginning of the year.
Read More: Many Crypto SPAC Deals Now In Jeopardy