Many Crypto SPAC offers are now in jeopardy

A number of planned mergers between crypto and web3 companies with special purpose acquisition companies (SPACs) are delayed or canceled as a result of the recent market route.

SPACs, also known as blank-check firms, are listed shell companies created for the sole purpose of taking private firms public. Although SPACs have a reputation for being a backdoor way of becoming public, they became prominent during the pandemic-driven market boom. In 2021, the SPAC agreements topped 81 agreements totaling $ 155.43 billion.

They became particularly attractive to crypto companies, whose unique business models could pose challenges for obtaining listing approval through traditional exchange routes, such as a listed offer. A total of 14 companies such as the metaverse infrastructure company InfiniteWorld, the crypto mining companies CoreScietific, Cipher Mining and Bakkt, and USDCUSDC
-backer Circle, entered into merger agreements with SPACS in 2019.

However, only five of the 14 offers announced since have actually gone through when the market for SPACs crashed with the market turnaround.

This week there was more precipitation.

Stock and stockbroker eToro announced the termination of the agreement with FinTech V, a SPAC that would have taken the company publicly for 10 billion dollars. The parties failed to meet the June 30 deadline set in the original agreement, citing “circumstances beyond the control of both parties” as the reason for the termination. eToro maintains that their “balance is strong,” according to the notice of termination.

Forbes is also among the companies that announced planned SPAC agreements that terminated the agreement. The media company had previously announced its intention to announce an agreement with Magnum Opus Acquisition, a Hong Kong-based SPAC, but the companies mutually announced that they would terminate the agreement in June 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 that is worth keeping an eye on is Circle, the primary issuer of USDC stablecoin, a dollar-based token with a market value of $ 55.57 billion. USDC has become prominent after the collapse of USTUST
/ LUNALUNA
and has achieved gains on tether, the largest stable currency by market value as a result of its perception as more transparent and reliable.

The company announced a merger with Concord Acquisition Corp with the intention of being listed on the stock exchange in July last year. The companies then signed an extension in February that doubled Circles’ valuation from $ 4.5 billion to $ 9 billion.

“Regarding the agreement, which was originally announced in July 2021 and updated in February 2022, we are continuing the review process of our S4 registration statement with the SEC,” a Circle spokesman told Forbes. The companies submitted an extension of the agreement until 10 December 2022.

Bullish Global, the Peter Thiel-backed cryptocurrency exchange that made headlines last year for also being valued at $ 9 billion, is among those who have extended notice periods with their respective SPACs and laid off about 10% of employees earlier this week. The Cayman Islands-based company announced a planned merger with the Far Peak Acquisition in July 2021. Although the first IPO was due on July 8, Bullish and Far Peak extended their external termination date to December 31, 2022.

Other exchanges that also have notice dates for planned mergers with SPACs include the Japanese cryptocurrency exchange Coincheck and the New York-based trading platform Apifiny Group.

Several crypto mining companies also looked at public listing through SPACs. PrimeBlock, BitFuFu and Griid Infrastructure are among those who announced SPAC mergers in the past year and have extended the notice periods.

In addition, Bitdeer, a cloud mining company for cryptocurrency, supported by the largest production company for crypto mining rigs Bitmain, and Blue Safari Acquisition extended its notice period until 14 September 2022.

“While we are unable to comment on the details of our transaction, we can share that we are confident in our business model and our stock exchange plan is underway. We look forward to sharing further updates as possible,” a Bitdeer spokesman told Forbes.

Bitmain is also the parent company of BitFuFu, another crypto mining company that expects to go public in an agreement with Arisz Acquisition Corporation in the third quarter of this year.

Finally, Griid Infrastructure, a bitcoin-carbon-free mining company, was originally expected to complete the merger with Adit EdTech Acquisition Corp in the first quarter of this year, but the company has not yet been listed on the stock exchange. Neither Griid Infrastructure from Adit EdTech responded to the Forbes request for comment.

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Mining companies may find the SPAC environment particularly challenging this year, as most listed shares are down 55-80% compared to the year. In addition, their finances are under pressure as many were forced to take on large amounts of debt to finance expansions. With the bitcoin price reversal, they are forced to liquidate bitcoin holdings at the bottom of this cycle. In May, listed miners sold every bitcoin they produced for the first time in history.

However, uncertainty in the market does not appear to affect the prices of the SPACs involved in the agreements, as the shares of the listed SPACs have been relatively stable, fluctuating between 1-3% since the beginning of the year.