Brandon Lutnick, son of US commerce secretary Howard Lutnick, is working with SoftBank, Tether, and Bitfinex on a new Bitcoin acquisition vehicle aimed at consolidating cryptocurrency holdings as digital asset markets respond to possible policy shifts under a second Trump administration.
As reported by the Financial Times, the venture, called Twenty One Capital, is launching with 42,000 Bitcoin and plans to grow its reserve. That initial amount would place it among the top three Bitcoin holders globally. The group behind the project says it will be formed through a reverse merger with Cantor Equity Partners, a special purpose acquisition company (SPAC) created by the younger Lutnick, which raised $100 million last year.
Twenty One Capital aims to follow a strategy similar to that of MicroStrategy, a company that shifted its focus from software to Bitcoin accumulation and saw its market valuation rise significantly as a result. Based on Bitcoin priced at $85,000, the deal values the new entity at $3.6 billion, including debt.
The company plans to trade publicly on the Nasdaq under the symbol “XXI” after the deal closes.
The goal is to create a publicly-listed Bitcoin investment company, backed by some of the most prominent – and scrutinised – players in the cryptocurrency sector. Tether is expected to contribute at least $1.5 billion of Bitcoin to the project, with the remaining cryptocurrency coming from SoftBank and Bitfinex. Tether and Bitfinex share a parent company and leadership team.
Cantor Equity Partners will raise a $385 million convertible bond and an additional $200 million through a private placement of equity to increase its Bitcoin holdings. The investors – SoftBank, Tether, and Bitfinex – will receive shares in Twenty One Capital in return, priced at $13 per share for the private placement and $10 for the bond conversion.
Lutnick took over as chair of Cantor Fitzgerald when his father joined the Trump administration, and appears to be positioning the new vehicle to attract institutional interest in Bitcoin. Twenty One Capital will be led by Jack Mallers, a cryptocurrency executive known for his role at Strike, a platform that facilitates Bitcoin purchases.
Twenty One will be majority-owned by Tether and Bitfinex, with SoftBank holding a minority stake. The partnership also builds on ties between Cantor Fitzgerald and Tether. Much of the dollar-denominated reserves that Tether claims to hold for its stablecoin are managed through Cantor. Tether CEO Paolo Ardoino recently told Reuters that 99% of Tether’s US Treasury holdings are custodied with Cantor.
“Bitcoin is one of the only truly decentralised, immutable, and censorship-resistant assets, and its role as the foundation of a new financial system is inevitable,” Ardoino said.
The formation of the vehicle comes as Bitcoin’s price continues to fluctuate following its post-US election peak of $106,000 in November. The price is currently around $93,000 per coin. Shares of MicroStrategy, a company tied closely to Bitcoin’s market movements, are down about 27% from their November high.
Cantor Equity Partners shares rose 24% on Wednesday following the announcement. The firm has also launched two additional SPACs led by Lutnick that are still searching for acquisition targets. Cantor Fitzgerald, meanwhile, has acted as underwriter for other SPACs and was previously involved in Tether’s $775 million investment in video-sharing platform Rumble.
Tether and Bitfinex both settled major regulatory investigations in 2021, with the New York attorney general and the Commodity Futures Trading Commission over issues related to transparency and compliance.
The venture arrives at a time when digital asset firms are watching US regulatory developments closely. The Trump campaign has signalled support for a more lenient approach to cryptocurrency oversight, which some market participants view as a catalyst for increased activity.
(Photo by Unsplash)
See also: Cryptocurrency in South Korea faces new rules after political upheaval
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