Jun 30, 2022 - Economy

Crypto SPAC deal forges ahead, minus $300 million

Illustration of a one hundred dollar bill on a monthly calendar

Illustration: Annelise Capossela/Axios

One crypto shop waiting to close its SPAC deal is forging ahead, despite missing a key deadline that frees investors from a previously agreed upon commitment of $300 million.

Why it matters: Many crypto shops are seeking a spot on U.S. public exchanges by merging with special purpose acquisition companies — only to be slowed down by a string of poorly performing post-merger firms, regulatory scrutiny and now — downturns in markets for both stocks and digital assets.

Driving the news: Block.one subsidiary Bullish Global and SPAC Far Peak Acquisition Corp. said they couldn't close their pending deal by a July 8 deadline, when subscription agreements for supportive financing would expire, a Wednesday filing showed.

  • Both parties decided to continue with the deal, sans the additional cash.
  • The deadline has been extended to December 2022, but they expect to close the deal before then.

Details: The $300 million — in what is called a PIPE, or private investment in public equity — was anchored by EFM Asset management, with participation from funds and accounts managed by BlackRock, Cryptology Asset Group and Galaxy Digital.

  • Those that agreed to the PIPE now get to walk away.
  • JPMorgan and Nomura, placement agents for the PIPE have resigned, according to a filing.

What's happening: The amount of cash Bullish stands to get is dwindling as the merging firms wait to close their deal, which is taking longer than the average deal (as Axios laid out earlier).

  • That said, there is also no minimum cash condition to close the transaction.

What they're saying: Bullish spokesperson Riya Anandwala tells Axios: "Bullish remains adequately capitalized to execute on its business strategy without a PIPE investment, which is not a condition to the completion of the business combination. We expect the deal to close in the third quarter of 2022."

Flashback: Bullish, a subsidiary of Block.one, a blockchain company backed by billionaire Peter Thiel and notable hedge fund managers, struck a then-valued $2.5 billion deal with Far Peak a little less than a year ago.

  • The deal was a win for Block.one founder Brendan Blumer, who with Dan Larimer built what was envisioned to be an Ethereum killer. (It has thus far not worked out that way)
  • Block.one raised $4 billion in a 2018 initial coin offering without a product.

The intrigue: Back in February, Stablecoin issuer Circle missed a deadline in its own SPAC deal that led to the parties renegotiating a deal value twice the previous one struck.

  • Circle's recut deal sported a higher valuation, in part, because of the growth in its stablecoin USDC.
  • Circle was also able to raise $400 million in additional funding in April, though it was seeking up to $750 million.

Between the lines: Bullish Global's pro-forma enterprise value of $2.5 billion will require an update as the deal gets closer to the finish line.

  • Recall that its investor presentation from July accounted for a balance sheet of 141,951 bitcoin priced at $34,000 and 20,200,006 EOS tokens priced at $4.
  • Bitcoin prices plunged below $20,000 and EOS was just under 90 cents as of Thursday morning.

Of note: Far Peak SPAC chief Tom Farley, former president of the New York Stock Exchange, is slated to take the helm of the combined company if the deal closes.

Our thought bubble: Amid tightening capital markets and plunging prices for digital assets, SPACs could be a good way to get cash injections for crypto companies — too bad those that came before them were mostly start-ups with pipe dreams.

Go deeper