Circle Internet Financial's SPAC merger agreement with Concord Acquisition Group falls apart.
The company says it will continue to pursue a public stock offering.
Circle CEO Jeremy Allaire believes that going public is crucial for gaining user trust in the short run.
Announced on December 5 that it has terminated a Special Purpose Acquisition agreement with Concord Acquisition Group, which would have enabled Circle to become a publicly-traded company.
The business merger proposal was first disclosed in July 2021, when Circle was valued at $4.5 billion. The agreement was later revised in February 2022, when the company's worth increased to $9 billion, with the USDC issuer aiming to go public by December 2022.
Despite the fact that the deal won't be accomplished, Circle co-founder and CEO Jeremy Allaire stated that the company still intends to go public.
SPAC: It is a company that has no actual commercial operations but raises capital through an initial public offering. The SPAC will then purchase or merge with a private company. This will ultimately assist businesses to become publicly traded companies.
Both companies terminated the agreement after the Securities and Exchange Commission rejected an S-4 registration statement they had previously filed with the agency.
As part of a merger, acquisition, or stock exchange offer, public firms must file S-4 Forms with the SEC. The form is intended to reduce fraud by reporting share allocations and agreements, as well as any other relevant information to the merger.
Previously, Circle proposed a merger with Concord, which is backed by former Barclays CEO Bob Diamond, but the deal was terminated in February 2022 due to valuation concerns.
At the time, Cathie Wood's Ark Invest was reported to have purchased 69,300 shares of the special purchase acquisition company, or SPAC, that is merging with Circle for $70.6 million via the company's ARK Fintech Innovation exchange-traded fund (ETF).
Experts believed that Cathie Wood's Ark Invest was the reason for the agreement's termination, but the real reason is that the company's valuation became more than doubled since the agreement was made.
Later, Circle revised the SPAC deal with Concord Acquisition Group at a valuation of $9 billion, which was anticipated to conclude later this month, but Monday's announcement effectively sealed the door.
Coincheck, a Japanese cryptocurrency exchange, has confirmed plans to pursue a public stock offering in the United States via Nasdaq. In addition, Bitcoin Depot, a prominent bitcoin ATM service provider in the US, also intends to go public through a merger with a SPAC.
Several other cryptocurrency and blockchain firms are also seeking to go public in the coming year. The significance of being declared a public trading company is that the company is not required to publicly disclose its financial results.
Experts believe that going public is part of the solution for companies to re-establishing trust in the cryptocurrency sector. Stablecoin explosions and bankruptcy filings in 2022 have eroded users' trust in the crypto industry.
