How Tether-backed Twenty One plans to rival MicroStrategy
US Commerce Secretary Lutnick’s son, Brandon Lutnick, overtook his father’s asset management company, Cantor Fitzgerald, when his father accepted President Donald Trump’s cabinet appointment. This week, Brandon announced a new competitor to MicroStrategy, Twenty One, led by Tether.
Cantor is a major player in the crypto industry because it manages many of the bonds backing Tether’s USDT stablecoin. Howard and Brandon Lutnick have staunchly supported Tether.
Yesterday, Cantor Chairman Brandon announced a Tether-controlled bitcoin (BTC) acquisition company involving Tether, SoftBank, and Jack Mallers, the founder of Strike. Mallers will lead the company as CEO.
The entities, blessed by the son of a Trump cabinet member, are forming Twenty One (NASDAQ:XXI). XXI is the Roman numeral symbol for 21, a reference to BTC’s 21 million supply limit.
Twenty One: Tether-controlled, Jack Mallers-led
The company will acquire and manage a large treasury of over 42,000 BTC. If that strategy sounds familiar, it directly intends to compete with the leveraged BTC acquisition strategy of Michael Saylor’s MicroStrategy.
Read more: MicroStrategy bought BTC at nearly the worst possible price last week
Twenty One will raise $585 million from the sale of $385 million in convertible senior secured notes plus $200 million in PIPE financing.
Because Twenty One is undergoing a special purpose acquisition company (SPAC) business combination subject to Securities and Exchange Commission (SEC) and shareholder approval, the only publicly-listed entity for traders to speculate on the deal is a minority stakeholder, Cantor Equity Partners (CEP).
The boards of directors for Twenty One and CEP unanimously approved the business combination.
2.7% of 42,000 bitcoin
Although Twenty One plans to own something like 42,000 BTC when it starts trading as XXI, CEP shareholders might only get 2.7% of that figure based on a pro forma ownership table illustrating possible post-conversion ownership of Twenty One.
Subject to a litany of conditions and disclaimers, the percentage might even be lower upon closing or as time progresses.
Not only will the company be indebted and its BTC be encumbered with a dizzying array of obligations that one observer said would make Satoshi Nakamoto roll in his grave, CEP shareholders will be among the smallest members of the XXI cap table.
Only two entities will be able to vote in the future company, according to an illustrative pro forma ownership disclosure: Tether/Bitfinex, and Softbank. Tether/Bitfinex will enjoy overwhelming control of the company, with 71% voting power.
More than doubled in two days
Although securities regulator Gary Gensler resigned (before Trump had the opportunity to fire him) and has left any legal enforcement to a highly accommodative SEC, the price action in CEP this week has certainly raised eyebrows.
On Tuesday, CEP closed for trading at $10.62 — near where it had been trading for weeks. On the day of the announcement, it closed at $16.50. Today, CEP hit $39.29.
If CEP ends up owning 2.7% of 42,000 encumbered BTC — which is, again, an illustrative projection from a SEC filing that might not actually occur — it would own about $106 million worth of encumbered BTC at today’s prices.
For context, the market cap of CEP is $290 million — more than double that BTC value — at a CEP share price of $28.
Got a tip? Send us an email securely via Protos Leaks. For more informed news, follow us on X, Bluesky, and Google News, or subscribe to our YouTube channel.