{"id":267138,"date":"2021-06-05T01:30:00","date_gmt":"2021-06-04T22:30:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/to-ipo-or-not-to-ipo-spac-is-the-question\/"},"modified":"2021-06-05T01:30:00","modified_gmt":"2021-06-04T22:30:00","slug":"to-ipo-or-not-to-ipo-spac-is-the-question","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/to-ipo-or-not-to-ipo-spac-is-the-question\/","title":{"rendered":"# To IPO or Not to IPO? SPAC is the question"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a26949550eaa\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a26949550eaa\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/to-ipo-or-not-to-ipo-spac-is-the-question\/#The_old-fashioned_way\" >The old-fashioned way<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/to-ipo-or-not-to-ipo-spac-is-the-question\/#SPAC_door\" >SPAC door<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/to-ipo-or-not-to-ipo-spac-is-the-question\/#Pros_and_cons\" >Pros and cons\u00a0\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/to-ipo-or-not-to-ipo-spac-is-the-question\/#Private_placements_and_mini-IPOs\" >Private placements and mini-IPOs<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># To IPO or Not to IPO? SPAC is the question <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-5a136f3a><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.exodus.com\"><img loading=\"lazy\" decoding=\"async\" width=\"1480\" height=\"200\" alt=\"\" src=\"https:\/\/s3.cointelegraph.com\/storage\/uploads\/view\/67c6342f02011a933a72cb8471c1165d.jpg\"><\/a><\/p>\n<p dir=\"ltr\">An initial public offering is the classic way to take a company public, but many crypto companies bypass the regulatory scrutiny with a backdoor SPAC merger<\/p>\n<p dir=\"ltr\">By Connor Sephton<\/p>\n<p dir=\"ltr\">If you want to sell stock in an American company to the public, traditionally you hold an initial public offering, better known as an IPO.\u00a0<\/p>\n<p dir=\"ltr\">An IPO starts with the long, arduous, and expensive process of filing an S-1 Registration Statement with the Securities and Exchange Commission (SEC).\u00a0<\/p>\n<p dir=\"ltr\">Of course, the purpose of an S-1 is to make sure companies are disclosing everything the public needs to know to make an informed decision about buying shares in your company, otherwise known as securities.<\/p>\n<p dir=\"ltr\">Which is something cryptocurrency companies tried to avoid by holding initial coin offerings, and why the SEC stomped so hard on the ICOs, suing the likes of DAO, Block.one, Telegram, and currently Ripple, levying multi-million-dollar fines and even forcing some companies to return the money raised to investors. Telegram was forced to return $1.2 billion of the $1.7 billion it raised from investors \u2014 giving them a very large haircut \u2014 as well as paying an $18.5 million fine.<\/p>\n<p dir=\"ltr\">And while several crypto companies have recently launched successful IPOs, there are several other routes to going public. Among them are direct public offerings, the \u201cmini-IPOs\u201d carried out under the SEC\u2019s Regulation A, or the \u201cprivate placement\u201d sales under Reg. D \u2014 which severely limit the amount that can be raised or the number of investors eligible to participate.\u00a0<\/p>\n<p dir=\"ltr\">Another more aggressive way to decrease SEC scrutiny is the increasingly popular SPAC, which is a backdoor that involves being acquired by a public company created especially for that purpose.\u00a0<\/p>\n<h2 dir=\"ltr\"><span class=\"ez-toc-section\" id=\"The_old-fashioned_way\"><\/span>The old-fashioned way<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p dir=\"ltr\">Until recently, crypto had, by and large, opted out of IPOs. Top U.S. exchange Coinbase was the largest \u201cpure\u201d crypto company to go public, and it took the direct listing route, avoiding underwriters.<\/p>\n<p dir=\"ltr\">But that changed when trading platform INX completed the first token IPO in early May, followed shortly by Swedish crypto broker Safello. And crypto-friendly Robinhood \u2014 which got into very hot water over the recent <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">Game<\/a>Stop debacle, followed by a Dogecoin SNAFU \u2014 is now going the IPO route.<\/p>\n<p dir=\"ltr\">There\u2019s a reason so many firms have avoided IPOs, however. Along with the time an IPO takes \u2014 <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly 12 to 18 months \u2014 the listing company works closely with a major middleman, the underwriter.<\/p>\n<p dir=\"ltr\">Underwriters are large Wall Street financial institutions that work closely with the listing company on regulatory issues, oversee the extensive marketing roadshow, help them set the right stock price, and then buy the shares and resell them through their networks of big institutional customers \u2014 for a hefty commission.\u00a0<\/p>\n<p dir=\"ltr\">That means IPOs not only cost a lot, they make it very hard for the little investor to get a piece of high-profile listings. That\u2019s an issue of fairness that Coinbase pointed to when it chose to go direct, which meant just listing and selling shares (COIN) on the Nasdaq.\u00a0<\/p>\n<h2 dir=\"ltr\"><span class=\"ez-toc-section\" id=\"SPAC_door\"><\/span>SPAC door<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p dir=\"ltr\">A SPAC is what\u2019s called a \u201cblank check company\u201d \u2014 one created solely for the purpose of allowing private companies to go public without going through a full IPO.<\/p>\n<p dir=\"ltr\">The SPAC raises money in an SEC-registered IPO that can only be used for one purpose \u2014 to acquire a private company \u2014 and is usually only listed on a major exchange like the NYSE or Nasdaq after the acquisition.<\/p>\n<p dir=\"ltr\">It&#8217;s an increasingly popular option, and one that the crypto \u2014 and especially fintech \u2014 industry has embraced. In January, ICE-owned cryptocurrency exchange Bakkt announced plans to merge with VPC Impact Acquisition Holdings in a SPAC that will see it listed on the NYSE.<\/p>\n<p dir=\"ltr\">In March, the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social<\/a> trading platform eToro, a Robinhood competitor which handles both crypto and stocks, announced plans to go public through a $10.4 billion SPAC merger with the creatively named FinTech Acquisition Corp. V.\u00a0<\/p>\n<p dir=\"ltr\">That same month Bitfury-owned bitcoin mining firm Cipher announced a SPAC merger that valued it at $2 billion and is expected leave the merged firms with nearly $600 million in cash.<\/p>\n<h2 dir=\"ltr\"><span class=\"ez-toc-section\" id=\"Pros_and_cons\"><\/span>Pros and cons\u00a0\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p dir=\"ltr\">SPACs have a number of advantages, starting with speed. An IPO can take 12 to 18 months, versus a SPAC\u2019s three to six.<\/p>\n<p dir=\"ltr\">Then there\u2019s money. How much an IPO raises depends on market conditions when it h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ens whereas a SPAC\u2019s price is negotiated ahead of time.\u00a0<\/p>\n<p dir=\"ltr\">The cost of marketing is much lower than with an IPO\u2019s extended road show, and as SPACs are generally sponsored by people with experience in finance and industry, companies can get expert advice.<\/p>\n<p dir=\"ltr\">On the other hand, SPAC sponsors usually keep a 20% share in the SPAC after the merger, diluting existing shareholders\u2019 holdings. And, SPAC investors can redeem their shares immediately, which comes off the top of the funds raised.<\/p>\n<p dir=\"ltr\">Beyond that, there is still plenty of SEC paperwork to file and less time to do it, as well as less of the due diligence that comes with an IPOs rigors. And, an IPO\u2019s underwriter checks that all the regulatory requirements are met, a review SPACs don\u2019t benefit from.<\/p>\n<p dir=\"ltr\">Then there\u2019s credibility. Going the IPO route brings that in a way SPACs don\u2019t.<\/p>\n<h2 dir=\"ltr\"><span class=\"ez-toc-section\" id=\"Private_placements_and_mini-IPOs\"><\/span>Private placements and mini-IPOs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p dir=\"ltr\">Regulations A and D a popular one for cryptocurrency companies that want to go public but don\u2019t have the size and resources for a full IPO.\u00a0<\/p>\n<p dir=\"ltr\">The SEC\u2019s Reg. D is fairly simple: Known as private placement, it comes under the IPO regulations, but the buyers must all be \u201caccredited\u201d investors \u2014 read \u201crich\u201d or \u201cexpert\u201d\u2014 and the disclosure hurdles are substantially lower. But, investors generally cannot sell their shares for one year.<\/p>\n<p dir=\"ltr\">Telegram tried to use a variation of this route with its TON blockchain, pre-selling tokens to a group of sophisticated investors under Reg. D, who would resell them to the public after the blockchain went live went live \u2014 a process called a simple agreement for future tokens (SAFT). The SEC, however, simply called it a somewhat delayed securities offering, sued, and got a court to delay the TON token sale during litigation. That forced Telegram to back down.<\/p>\n<p dir=\"ltr\">Reg. A, also known as a mini-IPO, is substantially more egalitarian. One company that just made it work very well is Exodus, a cryptocurrency wallet maker that recently raised $75 million \u2014 the maximum allowed under Reg. A+, which is open to any buyer. And the shares may be sold the next day.<\/p>\n<p dir=\"ltr\">And while the mini-IPO may be considered less onerous, it isn\u2019t easy Exodus CEO JP Richardson said in a recent CoinTelegraph YouTube AMA.\u00a0<\/p>\n<p dir=\"ltr\">\u201cIt&#8217;s very similar to actually doing an IPO and going through the whole process,\u201d Richardson said. \u201cWe found one of the greatest law firms out there to help us with this \u2014 Wilson Sonsini, the same firm that did something similar with Blockstack. We started this process in the summer of 2020. We submitted a 200-page offering document\u201d confidentially to the SEC in September.\u00a0<\/p>\n<p dir=\"ltr\">Which was good timing, as it was just after MicroStrategy began pouring hundreds of millions of dollars into Bitcoin and PayPal got into cryptocurrency, sparking a long bull market, Richardson added. Rallying the whole company, Exodus began selling stock on April 8. But there were no underwriters or stock exchanges involved.\u00a0<\/p>\n<p dir=\"ltr\">Instead, Exodus sold its stock via its own wallet, in what was \u201ca proof of concept to show the world that this is possible,\u201d Richardson said, adding that Exodus planned to use its experience to create a mini-IPO package for crypto firms.\u00a0<\/p>\n<p dir=\"ltr\">\u201cWe build in all the components from the actual offering itself, to the issuance of the stock, to the actual secondary trading,\u201d he said \u201cThen we will go to other companies and say, come on in. You can do a stock public offering right inside the Exodus platform. And the cool thing is you can buy legal stock at nighttime, you can buy it on a Saturday or Sunday \u2014 just like the internet. The internet ever sleeps, our stock never sleeps. And that&#8217;s how it should be.\u201d<\/p>\n<div style=\"background-color: #f0f0f0; padding: 8px 21px; font-weight: bold; color:#253137;\">Learn more about <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.exodus.com\" style=\"color: #253137\">Exodus<\/a><\/div>\n<div id=\"post-content\">\n<p><span style=\"font-size: 12px; color: rgb(169, 169, 169);\"><span style=\"font-weight: 600\">Disclaimer.<\/span> Cointelegraph does not endorse any content or product on this page. 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Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/to-ipo-or-not-to-ipo-spac-is-the-question\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# To IPO or Not to IPO? SPAC is the question &#8221; An initial public offering is the classic way to take a company public, but many crypto companies bypass the regulatory scrutiny with a backdoor SPAC merger By Connor Sephton If you want to sell stock in an American company to the public, traditionally&#8230;<\/p>\n","protected":false},"author":1,"featured_media":267139,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS9zdG9yYWdlL3VwbG9hZHMvdmlldy80YjI5NzIwZmVjYzI4ZjBmNmNmZTRlMTViMThlNTI3My5qcGc=.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,74863,74860,75036,77469,74898,74892],"class_list":["post-267138","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-cryptocurrencies","tag-cryptocurrency-exchange","tag-ico","tag-ieo","tag-sec","tag-tokens"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/267138","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=267138"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/267138\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/267139"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=267138"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=267138"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=267138"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}