Tether Tightens Grip on Bitcoin Treasury Firm Twenty One With SoftBank Buyout

In brief

• Tether has acquired SoftBank’s stake in Twenty One Capital (XXI), completely removing the Japanese tech giant from the venture.
• Shares that SoftBank purchased for nearly $1 billion last year were valued around $711 million on Wednesday.
• SoftBank’s departure forced the immediate resignation of its board designees, leaving XXI temporarily non-compliant with NYSE rules.

Tether signaled on Wednesday that it is consolidating control over Twenty One Capital (XXI), a Bitcoin-buying firm co-founded by the stablecoin giant last year, by acquiring shares held by Japanese investment firm SoftBank—one of XXI’s biggest initial backers.

The leading stablecoin issuer has purchased 89.1 million shares held by SoftBank, representing the entirety of the firm’s stake in the venture, according to an SEC filing. Under an agreement established last June, SoftBank paid $999.3 million for the exposure.

Although the transaction’s actual financial terms were kept private, SoftBank likely absorbed a notable haircut on its investment, considering the company’s position was recently valued at $711 million, with shares changing hands at $7.98, according to Yahoo Finance.

XXI’s stock price is up nearly 5% on the day, yielding a market cap of $5.2 billion, yet shares remained down 83% compared to a year ago. Amid a burst of Bitcoin-buying firms on Wall Street last year, XXI’s stock price soared as high as $53, a peak notched before the company merged with a blank check firm created by Cantor Fitzgerald.

Bolstering its majority ownership of XXI, Tether said in a blog post that the move underscores its conviction in the Bitcoin-buying firm co-founded alongside Strike CEO Jack Mallers, which hasn’t disclosed a purchase of the asset in over nine months.

“SoftBank’s involvement gave XXI the kind of institutional depth that few early-stage companies ever have,” Tether CEO Paolo Ardoino said in a statement. “Their experience backing some of the most consequential technology companies in the world brought credibility.”

XXI, which currently owns 43,514 Bitcoin, has increased its position a few times since it was created. As Bitcoin edged up to $77,470 on Wednesday, XXI’s stockpile was valued at nearly $3.4 billion, down from a peak of $5.4 billion in October, according to Bitcoin Treasuries.

In Wednesday’s filing, XXI, which trades on the NYSE, said that SoftBank requested the resignation of partners that served on the company’s board of directors and applicable committees. One of the partners served on XXI’s audit committee, leaving the subgroup with an insufficient number of independent members under exchange rules.

In December, Tether and SoftBank owned 45.1% and 25% of XXI’s Class A stock, respectively. At the same time, Tether held 51.3% of XXI’s Class B stock, which carries outsized voting power, while SoftBank controlled 29.2% of that share class. 

In XXI’s latest filing, the firm said that SoftBank’s Class B shares had been canceled. Additionally, the firm said that it plans to appoint an additional member to the audit committee who meets the necessary requirements “as soon as practicable.”

Decrypt has reached out to SoftBank for comment.

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