Crypto Treasury Dreams Crash as SPAC Deals Fall Apart

The dream of launching public companies to buy cryptocurrencies has taken a hit, as witnessed by the collapse of ReserveOne Inc.'s deal with M3-Brigade Acquisition V Corp. The company's shares have plummeted nearly 90% since the tie-up was announced nearly a year ago, making it dilutive for firms to raise money through equity markets to buy crypto.

ReserveOne had agreed to combine with M3-Brigade Acquisition V Corp., a special-purpose acquisition company, or SPAC. However, at least two large investors in ReserveOne demanded the sale be terminated due to concerns that its shares would trade at a discount to their net asset value if listed.

Other crypto treasury firms, such as Avalanche Treasury Corp., have also been severely impacted by the market's downturn. Avalanche Treasury shares have tumbled almost 90% since shareholders approved the combination, with the price dropping to around 85 cents on Thursday.

The collapse of these deals highlights the difficulties faced by digital-asset treasury companies (DATs) in raising capital through SPACs. DATs have struggled to build a genuine operating model and make accretive acquisitions, leading some experts to predict that only real operating companies in the digital-asset industry will succeed long-term.