😴 IPO dreams vs. reality

And just like that, BiT Global and Coinbase have ended their legal fight. 

The two will cover their own legal expenses, according to a filing to dismiss the case from BiT Global. The lawsuit ended with prejudice, meaning that it cannot be brought again.

BiT Global filed the suit last year, after Coinbase delisted wBTC following a partnership announcement between the wrapped bitcoin issuer and Tron founder Justin Sun. 

Coinbase, which has its own wrapped bitcoin product, said at the time that Sun’s involvement posed an “unacceptable risk.”

Unfortunately, we don’t have a lot of details about why the two are dropping the case, so we’ll just have to take this one at face value.

🛣️ Different paths

We talked a whole lot about Circle last week, and I’ve already mentioned that the success of the IPO opened up doors for other firms (take a look at Gemini, for example, which announced it confidentially filed an S-1 with the SEC earlier this year). 

But while there’s a ton of appetite on the public markets, the question has to be asked: Who’s actually ready to premiere on a public stage?

Dragonfly’s Rob Hadick poured some cold water on the hopes and dreams of a crypto IPO season on this week’s Empire episode. He and Haun Ventures’ Diogo Monica noted that most crypto companies are a tad smaller than public markets typically prefer.

To put that into perspective, we’d be talking about hundreds of millions raised in an IPO in comparison to the billion-dollar Circle debut. Hadick said that the IPO market is “definitely open.”

But that doesn’t mean that the firms are ready. Hadick expressed doubt that firms like Goldman Sachs or JP Morgan would be advising companies like Fireblocks to go public. 

“Fireblocks is not there. And that's true of Chainalysis, which is a great SaaS business. That's true of most of the other people we talked about. Kraken is a different story. And you know, I expect we'll see them [go] public. Maybe not this year, but maybe next year,” Hadick added. 

However, because of the appetite, there could be a slew of crypto IPOs that rush to the public markets before they’ve hit the typical maturity points. 

Hadick wouldn’t be surprised if firms talk to underwriters who promise to take them public through either a direct listing or go the more typical route like Circle and just aim to raise far lower (eyeing a $100 or $200 million raise versus billions). 

And, to be fair, crypto’s not a special snowflake when it comes to massive IPO success. Every industry that sees one company’s success has other players seriously thinking about how they can capitalize on the momentum. 

Generally, though, at least in my experience, it’s pretty rare to see firms capture the same fanfare or financial backing when they’re looking to hit copy and paste on another company’s playbook. But crypto thrives on smashing expectations, so perhaps that bodes well.

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• The Department of Justice seized $7.7 million in crypto laundered by North Korean IT workers who managed to secure US jobs under aliases. 

• The unbanked “Bitcoin Family” is taking extra precautions in the wake of the crypto kidnappings to keep themselves safe. 

• Metaplanet is planning to raise $5.4 billion to add to its bitcoin stockpile.

Bitcoin treasury companies continue to be a big topic. Now that there are so many, the question becomes, what do they do with all that bitcoin?

Zac Townsend, CEO of Meanwhile, told me he’s been watching this evolution with interest, given that it’s an area in which Meanwhile has a lot of experience. In case you forgot, Meanwhile is a bitcoin life insurance company that raised $40 million earlier this year. 

“​​In our case, you can see in our financial statements that that's something like…80-90 Bitcoin that we contributed to this entity. And then you provide a real financial service to people, and they pay you premiums. And that is, by some definition, leverage,” Townsend said. 

“Each aspect, at the core of our business, is providing a financial service. Getting leverage on that financial service, and then investing our corpus of capital to get a steady, conservative yield on bitcoin. And those are all things that the public Bitcoin Treasury companies are talking about and that we are already doing,” he explained further. 

For Townsend, the goal is to add to the bitcoin economy. 

“There's going to be a Bitcoin economy that's worth building, and that isn't a mere financial arbitrage to us; that's a thing in the world we're trying to instantiate. The company we've built as reflected in these financial statements is part of that identity of building in Bitcoin, not just buying bitcoin.”

Last week, Meanwhile released audited financial statements. The firm announced a 300% increase year-over-year in its net income of 25.29 bitcoin. 

I don’t have the answer to my own question today, but the immense popularity of bitcoin treasuries has kick-started a whole new conversation based on the big question: Is it worth it just to HODL?