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Brandon Lutnick, son of US commerce secretary Howard Lutnick, has teamed up with SoftBank, Tether, and Bitfinex to take advantage of a resurgence in cryptocurrency under the administration of US President Donald Trump.
The group is establishing a multibillion-dollar bitcoin acquisition entity that will absorb billions in cryptocurrency from the other partners. They plan to use these funds to replicate the success of MicroStrategy, a software company that experienced a significant surge in value after shifting its focus to cryptocurrency investments, according to sources familiar with the matter.
This initiative by Brandon Lutnick, who assumed the role of chair at brokerage Cantor Fitzgerald when his father transitioned to become Trump’s top trade envoy, aims to position itself at the forefront of the cryptocurrency investment boom.
MicroStrategy has garnered attention in the public markets by issuing stock and speculative debt to amass a substantial supply of bitcoin. The company has grown into a major player in the industry, holding tens of billions of dollars in bitcoin and boasting a $91 billion market capitalization.
Lutnick’s entity, a special purpose acquisition company named Cantor Equity Partners, raised $200 million in January. This capital will be used to establish a new firm called 21 Capital, which is set to receive $3 billion in bitcoin from the other cryptocurrency investors and trading firms involved.
Tether is expected to contribute $1.5 billion of bitcoin, while SoftBank and Bitfinex will provide $900 million and $600 million, respectively, in digital currency. Tether and Bitfinex share the same parent company and leadership.
The vehicle led by Lutnick will also raise a $350 million convertible bond and a separate $200 million private placement of equity to acquire additional bitcoin. Ultimately, SoftBank, Tether, and Bitfinex will convert their bitcoin investments into shares in 21 Capital at a valuation of $10 per share, pegging the digital currency at $85,000 per coin.
Although the deal is anticipated to be announced in the coming weeks, there is still a possibility of it not materializing, and the figures could change, as cautioned by the sources.
In 2021, Tether and Bitfinex resolved significant regulatory probes with the New York state attorney general and the Commodity Futures Trading Commission.
The Trump administration has pledged a more favorable approach to cryptocurrency trading. Cantor Fitzgerald has already benefited from this stance, advising on Tether’s $775 million investment in right-wing video-sharing platform Rumble.
Following Trump’s election victory in November, Bitcoin’s price surged to around $106,000, and while it has fluctuated in the subsequent months, it currently hovers near all-time highs at $92,000 per coin. MicroStrategy has experienced a 20% decrease in value from its peak in November.
The collaboration in the cryptocurrency sector marks the beginning of a potential wave of Spac deals led by Cantor Fitzgerald. Alongside the Cantor Equity Partners Spac, the brokerage has launched two other vehicles spearheaded by Brandon Lutnick to pursue opportunities in the market. Cantor has also underwritten several Spacs issued by external parties.
Cantor and SoftBank declined to provide comments on the matter. Tether and Bitfinex did not respond immediately to requests for comment.
