Cantor nears $3bn crypto venture with SoftBank and Tether
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Brandon Lutnick, son of US commerce secretary Howard Lutnick, is partnering with SoftBank, Tether and Bitfinex to capitalise on a cryptocurrency revival under US President Donald Trump.
The consortium is creating a multibillion-dollar bitcoin acquisition vehicle that will absorb billions in cryptocurrency from the other partners and use the funds in an attempt to replicate the success of MicroStrategy, a one-time software company that surged after pivoting to cryptocurrency investing, according to three people briefed on the matter.
The vehicle is an attempt by Brandon Lutnick, who was named chair of brokerage Cantor Fitzgerald when his father stepped down to become Trump’s top trade envoy, to be at the centre of a crypto investment boom.
MicroStrategy has become a sensation on public markets after it began issuing stock and speculative debt to purchase a massive stockpile of bitcoin. It has grown into an industry giant holding tens of billions of dollars in bitcoin and carrying a $91bn public market capitalisation.
Lutnick’s vehicle, a special purpose acquisition company, is seeking to create a publicly listed alternative alongside some of the industry’s biggest and often most controversial traders of crypto.
The vehicle, called Cantor Equity Partners, raised $200mn in January and will use the cash to create a new firm, called 21 Capital. It will receive $3bn in bitcoin from the other cryptocurrency investors and trading firms, according to the people.
Tether would contribute $1.5bn of bitcoin, while SoftBank and Bitfinex would contribute $900mn and $600mn, respectively, of the digital currency, the people added. Tether and Bitfinex are owned by the same parent company and share some of the same leadership.
Lutnick’s vehicle will also raise a $350mn convertible bond and a separate $200mn private placement of equity to buy additional bitcoin. Eventually, SoftBank, Tether and Bitfinex would see their investment of bitcoin converted into shares in 21 Capital at $10 per share and value the digital currency at $85,000 per coin.
While the deal was likely to be announced in the coming weeks, it could still fail to materialise, and the numbers could change, the people cautioned.
In 2021, Tether and Bitfinex settled large regulatory investigations with the New York state attorney-general and the Commodity Futures Trading Commission.
The Trump administration has promised a more accommodative stance to cryptocurrency trading.
Cantor Fitzgerald has already been a beneficiary, advising on Tether’s $775mn investment in rightwing video-sharing company Rumble.
Bitcoin’s price peaked at about $106,000 in the month after Trump’s election win in November and has seesawed in the following months but remains near all-time highs at $92,000 a coin. MicroStrategy has fallen by a fifth in value from record highs reached in November.
The crypto tie-up is the first in a potential wave of Spac deals led by Cantor Fitzgerald. In addition to its Cantor Equity Partners Spac, it has created two other such vehicles led by the younger Lutnick that are hunting for deals.
The brokerage has also underwritten a handful of Spacs in recent months issued by third parties.
Cantor and SoftBank declined to comment. Tether and Bitfinex did not immediately respond to requests for comment.