Crypto SPACs Brace for Cruel Summer With Lower Valuations, SEC Scrutiny

Deals may need to get repriced, an industry investment banker told CoinDesk.

AccessTimeIconJun 4, 2022 at 1:00 p.m. UTC
Updated Apr 9, 2024 at 11:22 p.m. UTC

Special purpose acquisition companies (SPAC) were Wall Street’s hottest way to hit the public market, but the craze has cooled amid an overall market downturn along with added Securities and Exchange Commission regulations.

If parties involved in existing deals want to proceed, they’re going to need to reprice them to reflect current market comps, Peter Stoneberg, managing director at M&A firm Architect Partners, told CoinDesk. “SPACs overall have been very volatile and on a downward trajectory,” Stoneberg said.

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  • Last Wednesday, media outlet Forbes scrapped its plans to go public via a SPAC at a $630 million valuation through a merger with Hong Kong-based Magnum Opus Acquisition Ltd. (OPA). Crypto exchange Binance had previously provided a $200 million strategic investment in Forbes in conjunction with the proposed deal.

    Regulation

    To enhance investor protection, the SEC recently said that it would propose “specialized disclosure requirements with respect to, among other things, compensation paid to sponsors, conflicts of interest, dilution, and the fairness of these business combination transactions.”

    The SEC’s report noted that SPACs nearly doubled the amount they raised from over $83 billion in such offerings in 2020 to more than $160 billion last year. The SEC added that in those years over half of all initial public offerings were conducted using a SPAC.

    Stoneberg noted headwinds for SPAC participants. The SEC is now being more cautious on the overall SPAC process, particularly crypto-linked deals, he added.

    Crypto miners and capital

    Cryptocurrency miners require plenty of capital for data centers and rigs, but capital is scarce now, Stoneberg said.

    “There’s not a lot of capital out there for mining companies right now or for SPACs,” he said. The private investment in the public equity (PIPE) market was “very active, but today it's pretty much dead.”

    Here are crypto SPAC deals investors are watching:

    • Circle, the backer of the USDC stablecoin, and its combination with Concord Acquisition Corp. (CND). The parties reached a new agreement with an initial outside date of Dec. 8, with the potential to extend to Jan. 31, 2023, under “certain circumstances.”
    • Miner PrimeBlock with 10X Capital Venture Acquisition Corp. II (VCXA), in a deal expected to close in the second half of the year.
    • Miner Bitdeer and Blue Safari Group Acquisition Corp. (BSGA), in a deal that was recently extended.
    • Bitmain-backed miner BitFuFu and Arisz Acquisition Corp. (ARIZ), which is expected to list on the Nasdaq in Q3.
    • Miner Griid Infrastructure and Adit EdTech Acquisition Corp. (ADEX), originally expected to close in Q1.
    • Coincheck, one of Japan's largest crypto exchanges, with Thunder Bridge Capital Partners IV. The deal is expected to be completed in the second half of this year.
    • Investing platform eToro Group and FinTech Acquisition Corp. V (FTCV). The deal has a June 30 termination date.
    • Crypto investment platform Bullish and Far Peak Acquisition Corp. (FPAC), with an outside termination date that was recently extended to July 8.
    • Digital asset trading network Apifiny Group and Abri SPAC I, expected to close in Q3.

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    Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.