Bond brokerage Cantor Fitzgerald, stablecoin giant Tether and SoftBank Group are teaming up to launch Twenty One Capital, a bitcoin accumulation vehicle aimed at Wall Street institutions.
The new entity will go public via a merger with Cantor Equity Partners (CEP), a special purpose acquisition company (SPAC) sponsored by an affiliate of Cantor (also Tether’s investor and custodian), at a $3.6 billion pro-forma enterprise value. Billionaire Howard Lutnick led Cantor for four decades and is now the United States Secretary of Commerce. Cantor is now run by his 27-year-old son, Brandon. Tether and its affiliated exchange Bitfinex will hold a majority stake and SoftBank a sizable minority. Jack Mallers, the founder of bitcoin payments firm Strike, will serve as CEO.
Twenty One will hit the ground running with roughly 42,000 bitcoin, worth $3.6 billion at the 10-day average price of $84,864, sourced from cash commitments and contributions of coins from Tether, Bitfinex and SoftBank—$1.5 billion, $600 million and $900 million respectively, according to Financial Times, in exchange for equity. The trove will make Twenty One the third-largest corporate bitcoin holder, trailing only Strategy (formerly MicroStrategy) with its 538,200 BTC (worth $50.5 billion) and mining company MARA’s 47,531 BTC (worth $4.5 billion).
To fuel further purchases, the company has secured $585 million in financing: $385 million in convertible senior secured notes with a $13 conversion price and a $200 million private investment in public equity (PIPE) at $10 per share. Tether will also buy bitcoin equal to the net proceeds from the convertible-note and equity PIPE sales (after fees) within ten business days. If note investors exercise their up-size option, Tether will buy even more. At closing, Twenty One will use the PIPE proceeds to purchase that same bitcoin from Tether at cost.
Twenty One’s business model echoes that of Nasdaq-listed Strategy, the sleepy software outfit turned into a bitcoin volatility juggernaut by billionaire co-founder Michael Saylor. Thanks to clever financial engineering and leverage, Strategy’s $91 billion market capitalization is nearly twice the value of the bitcoin it holds in its treasury. Twenty One’s version of Saylor’s creation includes two custom metrics to lure investors: Bitcoin Per Share (BPS), counting coins per fully diluted share, and Bitcoin Return Rate (BRR), tracking BPS growth. Neither measure appears to address any tangible return rates for investors. The press release pitches grand ambitions: “Twenty One intends to develop a corporate architecture capable of supporting financial products built with and on Bitcoin. This includes native lending models, capital market instruments, and future innovations that will replace legacy financial tools with Bitcoin-aligned alternatives.”
Shares of Cantor Equity Partners will continue to trade on Nasdaq under the symbol “CEP” until the closing of the transaction. Twenty One will seek to trade after closing under the ticker symbol “XXI.”