Tether’s three-way crypto deal is called off

A proposed merger of three crypto firms has been scrapped, with one of their leaders stepping down and another consolidating power across the Tether-backed franchise.

Twenty One Capital, Strike and Elektron Energy no longer plan to combine, according to details the companies shared with Bloomberg News. Jack Mallers — the chief executive officer of Twenty One Capital and Strike, and a prominent name in crypto circles — has stepped down from his role at Twenty One Capital, while Elektron CEO Raphael Zagury is taking over that position.

Strike intends to remain a standalone company, according to a statement. There are no plans for it to unite with Twenty One Capital anymore, though discussions between Twenty One and Elektron are ongoing. Tether owns majority stakes in the latter two.

The original idea, proposed by Tether in April, was to bring together three distinct crypto businesses: Twenty One Capital’s digital-asset treasury, or DAT, Strike’s crypto trading and Elektron’s Bitcoin mining. Tether is the largest stablecoin issuer globally, with a wide range of investments.

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DATs have fallen on hard times as Bitcoin’s price has slumped, resulting in financial losses and job cuts at major crypto firms. Few companies have Bitcoin accumulation, customer trading and crypto mining inside the same house, and it’s not entirely clear why the Tether-proposed deal fell apart.

Zagury told Bloomberg his companies are still seeking a path.

“The structure evolved as Jack decided to focus full-time on Strike and I stepped in to lead Twenty One,” Zagury said. “Strike is continuing to grow independently, and Twenty One is focused on building the operating, governance, and capital markets foundation for its next phase.”

He wants Twenty One Capital to focus not just on buying Bitcoin, but on generating cash flow and how it allocates capital, he said.

A representative for Mallers did not respond to a request for comment.

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“Jack played a foundational role in building XXI. He took conviction in Bitcoin and turned it into a public company, and we’re grateful for that,” said Paolo Ardoino, CEO of Tether. “Now that we embark on the next chapter, Rapha is one of the best operators in this industry, with a track record of building businesses with strong cash flows and disciplined execution. He brings exactly the operating standards XXI needs as it enters its next phase of growth.”

Twenty One Capital launched in December through a special purpose acquisition company, or SPAC, backed by Tether, as well as Japanese investment firm SoftBank Group Corp. and investment bank Cantor Fitzgerald LP. It held more than 40,000 Bitcoin — the third-largest corporate holding at the time.

Twenty One Capital’s share price has slumped 40% from a peak in early May to $5.32.

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