The business model of launching a public company to buy crypto is falling apart. As a result, those in the queue to do so through blank-check companies are facing pressure from investors against a market backdrop that is fiercely unfriendly.
Take ReserveOne Inc., a cryptocurrency asset manager that had prominent associates, including private equity magnate and former US Commerce Secretary Wilbur Ross.
ReserveOne had agreed to combine with M3-Brigade Acquisition V Corp., a special-purpose acquisition company, or SPAC, whose sole purpose is to find another entity to buy, taking it public in the process. Ross did not back the deal financially, but after it closed, he was slated to join ReserveOne’s board. Other promoters of the effort are a who’s who of big names in finance and crypto.
However, the $1 billion transaction collapsed after at least two large investors in ReserveOne demanded the sale be terminated, according to people familiar with the matter.
Those investors believed ReserveOne’s shares would inevitably trade at a discount to its net asset value if they listed because of how far Bitcoin and other tokens have fallen since the tie-up was announced nearly a year ago, said the people, who were not authorized to discuss details publicly. Combined with fees that would’ve been owed to bankers and sponsors for completing the deal, it simply wasn’t worth it, the people said.
Ultimately the two firms agreed to bid each other farewell, according to a June 12 filing.
A spokesperson for M3 declined to comment. ReserveOne didn’t respond to requests for comment.
The scuttled ReserveOne-M3 transaction is emblematic of problems with trying to introduce a digital-asset treasury company, or DAT, through a SPAC these days. Others with similar plans have either failed or flopped, reflecting the market’s deterioration.
