Tether first suggested the merger plan back in April. Tether owns majority stakes in Twenty One Capital and Elektron Energy.
According to a statement, Strike plans to continue operating independently. Strike will not be merging with Twenty One Capital, according to the statement. Discussions continue between Elektron Energy and Twenty One Capital.
In an interview with Bloomberg, Zagury stated that his firms continue to explore possibilities.
"The structure evolved as Jack decided to focus full-time on Strike and I stepped in to lead Twenty One," Zagury said. "Strike is continuing to grow independently, and Twenty One is focused on building the operating, governance, and capital markets foundation for its next phase."
Mallers' spokesperson did not reply to a request for comment.
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Twenty One Capital went public in December via a SPAC that was supported by Tether, SoftBank Group Corp., and Cantor Fitzgerald LP. At launch, it held over 40,000 Bitcoin, making it the third-largest corporate Bitcoin holder.
The downturn in Bitcoin has caused difficulties for digital-asset treasuries, resulting in layoffs and financial setbacks for many prominent crypto firms. This challenging environment has forced companies to reassess their strategies, with Twenty One Capital now pivoting toward cash flow generation under new leadership.
"Jack played a foundational role in building XXI. He took conviction in Bitcoin and turned it into a public company, and we're grateful for that," said Paolo Ardoino, CEO of Tether. "Now that we embark on the next chapter, Rapha is one of the best operators in this industry, with a track record of building businesses with strong cash flows and disciplined execution. He brings exactly the operating standards XXI needs as it enters its next phase of growth."
The unraveling of the merger reflects broader headwinds in the crypto market. Bitcoin's price decline has pressured digital-asset treasuries, prompting layoffs and financial strain at many firms. Tether, which holds majority stakes in both Twenty One Capital and Elektron Energy, continues to play a central role as the two entities negotiate a potential standalone deal. Meanwhile, Strike remains fully independent under Mallers' leadership.
Twenty One Capital's December SPAC was a milestone, backed by major investors including Tether, SoftBank, and Cantor Fitzgerald. Its original Bitcoin cache ranked it among the largest corporate holders, but the subsequent crypto downturn cut its valuation and pushed the firm to reconsider its strategy toward sustainable revenue instead of pure accumulation.
Zagury aims to shift Twenty One Capital's strategy toward generating cash flow and prudent capital allocation, not merely accumulating Bitcoin.
Twenty One Capital and Elektron Energy remain in active talks.
The collapse of the merger and Mallers' departure come amid a broader restructuring in the crypto industry. Tether, which has significant holdings in both Twenty One and Elektron, remains a key player in shaping their futures. The SPAC that brought Twenty One public was a notable event, but the subsequent drop in Bitcoin's price has forced many similar firms to pivot from accumulation to revenue generation.
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