Oh, man, this story made me laugh.

OK, recap on treasury companies and their weird, financial gravity-defying summer (#1217842) we had last year:

• you could issue stock (=diluting) to buy bitcoin, and occasionally some shitcoins, to cover the dilution and then some! (=accretive)
• when you announced, either the stock issuance or the bitcoin purchase, your stock went up.
• Financial market players memed their way into this, launching hundreds of these scam-ish companies.
• the values they traded at went from much more than the bitcoin they held (call your local podcast-influencer scammer for an explanation), to "more" than the bitcoin they held, to now: less than the bitcoin they held.

For a while, you could sell $1 of crypto on the stock market for $2. This is called a “digital asset treasury company,” or DAT: You raise $100 million from investors in a stock offering, you use the $100 million to buy Bitcoin or Ether or whatever, and then your stock trades up to $200 million. Why did this work? There were reasons, but everyone has forgotten them by now, and it has stopped working.

Since most of the people running these clown shows embodied the superficial meaning of bitcoin (NGU) but failed the substantive meaning of Bitcoin (debank, exit financial system, make fiat banking/financial games unviable, #1291642), we got a lot of crap in the last 6-12 months.

Levine, having about as much fun as I have, found an excellent story now—basically capturing that phenomenon multiplied by the SPAC nonsense of a few years back.

Alright, so ReserveOne, was one such "DAT," sponsored by M3-Brigade, a SPAC. Idea was, raise a bunch of investor schmuck money in a PIPE deal, together with the SPAC-money already sitting on a NASDAQ listing, use all the funds to buy bitcoin (and solana and stuff). Profit.

...Except, tradfi is slow and so this deal hasn't closed yet, and now that the treasury-company magic stopped working there's no point/value-add to the deal.

Kicker is that SPAC owners, whose funds have been sitting around earning fiat interest, can vote to decline the deal and receive their money back. The PIPE (#1356919) investors, however, have not put up any money, but don't get to vote on a deal that, for them, now sucks. (Their money would go to fees + SPAC redemption, and what remains would instantly be trading at a discount, hashtag capital destruction.)

Levine summary: "the foundational premise of DATs, in that they can trade at premiums to NAV, has largely disappeared"Levine summary: "the foundational premise of DATs, in that they can trade at premiums to NAV, has largely disappeared"

Now, the sponsor of the SPAC + Cantor Fitzgerald really want this deal to close, because they earn a bunch of tx fees.

the merger hasn’t closed yet! They haven’t bought the crypto! Everyone could just walk away. “Never mind, putting $750 million into a pot to buy crypto is not the great trade we thought it was, forget it.” Presumably the PIPE investors would like that. The problem is that M3-Brigade’s sponsor wants the deal to close (it gets like $70 million worth of stock if it does), and Cantor Fitzgerald wants the deal to close (it gets like $30 million of fees if it does), even if the deal is not actually good for the regular investors.

So, obviously the two sides start buying up the publicly traded SPAC shares so they can vote their interest.

This is so funny you can't even script itThis is so funny you can't even script it

We'll see who wins, basically who's left with the stinky bag. Have fun staying poor, everyone

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