Blank-Check Firms Stuffed With Crypto Are Financial 'Turducken'

Watch Blank-Check Firms Stuffed With Crypto Are Financial 'Turducken' - Bloomberg on Dailymotion

Transcript

00:00Just a reminder that SPACs, they were big in the sort of retail trading boom post-COVID,

00:04but they weren't new then. I was actually doing some research earlier this week on Jamba Juice,

00:08and Jamba Juice's IPO wasn't an IPO. It was a SPAC. This was like a thing in the early 2000s.

00:14Decades ago. Yeah.

00:15Or when SPACs, well, SPACs fell out of favor back then because the money would sometimes go missing,

00:21and it wasn't really regulated by the SEC that closely. The money would go missing.

00:24A little bit of a concern if you're supposedly treating it as kind of a bank account that returns

00:28T-bills plus anything else. But we did see, to your point, we saw a boom in 2020. We saw a boom

00:34in 2021. DraftKings, UTS, Verimobility, a lot of real companies went public via SPAC. So a lot of

00:40people think of SPAC as a bad word or a dirty word, but there are plenty of success stories,

00:46but a lot of companies blew up. Okay.

00:49Which brings us to crypto.

00:50Which brings us to crypto and turducken. Turducken is a deboned turkey stuffed with a duck that's

00:55stuffed with a chicken. I didn't realize I would have to define it.

00:57Yes, because I needed to look it up. So how does that relate to what we're seeing with crypto and

01:03SPACs? So we've seen at least nine of these deals. So a SPAC forms, it's a blank check company. They

01:08raise money to go out and buy a portion of a private company, take them public. It's a backdoor

01:12way of going public. Digital asset treasuries are holding companies that essentially hold

01:17crypto tokens, whether that's Bitcoin, whether it's Ether, whether it's a combination.

01:20So we've seen a number of SPACs partnering with DATs to then go public. So using the

01:26turducken reference, you take some crypto, you put it in a digital treasury company,

01:31as you can see. So your chicken goes in the turkey or your chicken goes in the duck. The

01:35SPAC is the turkey. And then you put that in the oven. I think I don't actually know how

01:38these things get cooked, but that's really what we've seen. So we've seen Cantor Fitzgerald

01:41strike a couple of these. We've seen the group from Cohen, Columbus Circle striking one of

01:47them as well.

01:47It's all well and good. And by the way, maybe we'll have a tofurkey for the vegetarians

01:51out there. Tofurkey, turducken. I don't know if they do that. But it's been all well and

01:56good when the price of these digital assets have been going higher. But Bitcoin down about

01:5930 percent from its all time high back in October. If the outlook is sort of unsteady,

02:05do we see a kind of a move away from these?

02:07Well, we will see at least two of them cross the finish lines in the coming weeks. So that

02:11Cantor deal with 21, their deal votes on December 3rd, as is the Columbus Circle partnership

02:15with Pomp's ProCap. So those should cross the finish line when we see them trading.

02:20The question is for the others that are waiting to get that approval, what happens there and

02:24how do investors receive them? Because when you look back throughout the summer, we saw

02:27companies striking reverse mergers. We saw these SPAC deals being announced. That was

02:31back when MicroStrategy traded north of two times its net asset value. Now it's closer to

02:351.2. So it's falling out of favor. And the big thing when you talk to investors is you

02:39can view DATS really as a marketing tool. So when you're competing with Michael Saylor, if

02:42they're at 1.2, you're probably below that.