Three major companies, Tether, SoftBank, and Cantor Fitzgerald, unite to launch a $3.6 billion Bitcoin accumulation company, 21 Capital. Strike CEO Jack Mallers will occupy a CEO position in 21 Capital. The company is going to go public via a SPAC merger with Cantor Equity Partners. Will the company become a strong rival to Saylor’s Strategy?
21 Capital launches with 42,000 bitcoins in assets. Japanese tech giant SoftBank provides a $900 million investment and will have a minority ownership. Tether is going to contribute around $1.5 billion to the corporate treasury.
21 Capital will mediate corporations’ involvement in Bitcoin investing without having to resort to the use of crypto ETFs. 21 Capital will use unorthodox metrics such as “Bitcoins Per Share (BPS)” or “Bitcoin Return Rate (BRR).”
Currently, the company is publicly traded as CEP but aims to get a new ticker, XXI, in the near future. The company outrightly compares itself with Strategy, the most established Bitcoin-focused company so far. The bold acquisition of 42,000 bitcoins swiftly throws 21 Capital into the leading spot of the corporate Bitcoin race.
Jack Mallers, an established professional and influencer in the crypto sector, said in a television interview that the company intends to raise “as much capital as [it] can acquire.” Here’s what he said:
“Again, my one rule to my shareholders is it will be accretive. Our Bitcoin per share will grow. We will never have Bitcoin per share negative. At least, that’s our intent. Our intent is to make sure that when you’re a shareholder of 21, that you’re getting wealthier in Bitcoin terms. And that’s my job as a CEO to deliver that. So we plan on raising capital in all different types of sectors and markets and really blending Bitcoin and incorporating it in the traditional financial system to deliver a powerful equity to the public markets for Bitcoin.”
A new public company spending millions on Bitcoin and betting on a Strategy-like Bitcoin playbook–that sounds bullish. Finally, Strategy will have a vial competitor and more incentive to seek new opportunities. However, both the list of the parties involved in Twenty One and their mutual connections leave a bitter taste for some in the crypto community. More than that, yet another company that allows its clients to own Bitcoin without owning Bitcoin is not something everyone greets.
“Ultimate exorbitant privilege joint venture”
In general, the combination of the companies involved in the consortium is mighty, probably even too mighty:
- SoftBank was fined for violating anti-monopoly laws in 2021; it owns shares in various huge U.S. and Japanese companies
- Tether, the biggest stablecoin and one of the biggest owners of the U.S. treasury bills, denied Bitcoin price manipulation allegations in 2017 and accusations of a lack of independent audits
- The chair of Cantor Fitzgerald is the son of the U.S. Secretary of Commerce, Brandon Lutnick
Head of Alpha Strategies in Bitwise Invest, Jeff Park, was one of the first to hint that the new company is more than just another big player in the industry. In an X post that was not quite understood by most (just look at the comment section), Park called 21 Capital an “ultimate exorbitant privilege joint venture” and a “wild move.”
He continued his message by saying that 21 Capital will supercharge dollar exports in a positive feedback loop. Trying to satisfy the demand for details from Park, an X user, Kinky Contango stepped in and gave their vision of what Park could mean to say.
Ties of Tether with the U.S. financial top officials, leadership in treasury bills ownership, and worldwide demand both for USD and USDT may help pump up the American dollar price in a very quick manner, which may turn away foreign buyers of U.S. goods and services as it may become too costly.
SoftBank’s complicated past
SoftBank has a troubled history of investments and bets. Its founder is sometimes referred to as one of the worst investors, while definitely some of his decisions were absolutely correct.
In 1999, SoftBank founder Masayoshi Son was the richest man on Earth, and he invested in many Internet companies not long before the dot-com bubble burst. That year, he “owned 25% of the Internet.” It’s understood that the next thing was 70 billion in losses as the dot-com bubble burst. This money personally belonged to Son. No man before ever lost that much.
However, Son invested most of the remaining money in the little-known Alibaba, and it turned out to be a worthy bet. Nevertheless, some perceive Son as a gambler and criticize his ability to make accurate forecasts. Later failures include Uber’s valuation drop after SoftBank acquired the company and unfortunate Bitcoin investments – Masayoshi Son lost around $130 million on Bitcoin, having bought BTC at the peak price in 2017 and sold it at a low price in 2019.
One of Masayoshi Son’s biggest mistakes in the 2010s was investing around $16 billion in WeWork, a company that went bankrupt two years after its IPO. Will Capital 21 be his next Alibaba or, rather, his next WeWork? Time will show.
Tether’s hazy future
Tether is the company behind one of the biggest cryptocurrencies and the most popular stablecoin, USDT. Although USDT is an absolute leader in its sector and crypto is equally recognized by African workers and institutional investors, Tether has a long history of tensions with the law. Not long ago, the company had to leave the European market due to its inability to fit the standards set by the MiCA law regulating stablecoins.
It is not clear if Tether will manage to keep its stablecoin business in the U.S. as the new regulations will require more transparency, something that Tether has not been good at all the time. Currently, Tether is working on a large-scale project in Africa aimed at addressing the problem of electricity scarcity in Africa. Similar to the African project, Tether’s involvement in 21 Capital is a way to diversify its business in case USDT is delisted from U.S. exchanges.
What’s more interesting is that through 21 Capital, Tether establishes its ties with the U.S. government and Wall Street brokerage as the latter’s chair is Brandon Lutnick, a son of the U.S. Secretary of Commerce Howard Lutnick, formerly a Cantor Fitzgerald head.
Final thoughts
Strategy has been a lone actor in the sector for too long. With a new, ambitious player in the field, it will have to prove itself. We will likely see more names arriving to play on Strategy’s field. However, on top of the good news about a new Saylor rival, it’s worth keeping your eye on how 21 Capital will impact the crypto sector and the world economy in general.
