Japanese exchange to list on Nasdaq via $1.25B SPAC merger

TL;DR Breakdown

• Japanese exchange Coincheck to list on Nasdaq following a $1.25 billion SPAC merger.
• Coincheck’s $530 million digital money heist prompted more stringent regulatory monitoring among crypto exchanges.

On Tuesday, one of Japan’s biggest cryptocurrency exchanges, Coincheck Inc, announced that it would go public in the United States. In a $1.25 billion deal, the publication follows through on a specialized purpose acquisition merger with blank-check firm Thunder Bridge Capital Partners IV Inc.

Japanese crypto exchange to list on Nasdaq

The agreement with the Japanese firm will contribute $237 million to the combined company. Assuming there are no redemptions, the money comes from the special-purpose acquisition company’s (SPAC) trust. Additionally, the exchange will become a Coincheck Group BV (CCG) subsidiary.

SPACs define as publicly held companies that do not conduct business and trade their stock on the private market. They offer their shares to the public to raise cash for the future takeover of a private company.

The agreement is said to have a pre-money valuation of $1.25 billion at the end of 2022. The Japanese Coincheck is yet another fintech and cryptocurrency firm attempting to go public through SPAC.

The trading platform based in Tokyo Japan is a crypto exchange that allows customers to buy and sell cryptocurrencies. It also serves as a marketplace for non-fungible tokens (NFTs). It has around 1.5 million clients.

Coincheck said that it would continue to be a subsidiary of Monex Group, which acquired the exchange in 2018. The firm was at the center of a $530 million digital money heist in 2018. The event has prompted more stringent regulatory monitoring among crypto exchanges.

Furthermore, it called for an increase in crypto exchanges’ risk management infrastructure. In 2020, Coincheck suffered a data breach that might have exposed personal information such as a registered address and birthdate.

Later that year, Coincheck was bought by Monex Group Inc., a Japanese online brokerage, for about $34 million. Further, the company intended to start an initial public offering of Coincheck in the near future. The firm contends that the listing will enable it to expand its services for its Japanese customers and further strengthen its security structure.

The details of the merger

After the merger, Monex will control approximately 82% of the combined firm, excluding warrants and earn-outs. According to the agreement, existing Coincheck investors will be entitled to up to 50 million shares if the company’s stock price rises in future years.

The combined company, to be known as Coincheck Group NV, will be listed on the Nasdaq market under the ticker “CNCK.” The deal anticipates completion in the second half of this year.

The value of the merger ranges around $1.25 billion, with 125 million shares in exchange. The resulting conglomerate will receive $237 million in trust money held by Thunder Bridge IV. Lastly, the board of directors of Coincheck, Coincheck’s parent company Monex Group, Inc., and Thunder Bridge IV, has given its approval to the agreement.

Coincheck will not be the first cryptocurrency exchange to go public through a SPAC merger. In 2021, several prominent crypto services and mining companies took the SPAC merger agreement. Bakkt went public with a SPAC, while Griid Mining joined forces for $3.3 billion worth of Bitcoin mining operations.

According to some market experts, the reason for such a high rate of SPAC mergers is that they provide distinct advantages over other forms of finance and liquidity. Traditional IPOs frequently result in lower valuations, less dilution, faster access to capital, greater certainty, and fewer regulations than SPACs.