A proposed $1.5bn merger between crypto companies Swyftx and Superhero had to be cancelled as both companies cited uncertain regulatory sentiments.
The mega-deal would have formed one of the biggest local crypto behemoths in Australia.
Both Swyftx and Superhero have been building reputations as brands that are popular with young traders and investors, but they are now unwinding the deal after signing an agreement to proceed in June this year.
There are also macroeconomic conditions to factor in, as Swyftx had to lay off 40% of its staff due to the sharp downturn in the cryptocurrency market.
Much of this was brought on by the collapse of FTX. The firm’s boss Sam Bankman-Fried is now being extradited from the Bahamas to the US where he will most likely face numerous charges.
Swyftx also confirmed that it would need more capital to maintain its operations intact.
Meanwhile, Superhero, which was founded in 2020, has faced challenges of its own. The company was largely inspired by Robinhood, a US-based trading company, which allowed young people to participate in crypto and partially drive its value.
But the idea of creating “low cost” or “no cost” broker services has not sat too well with regulators. The Australian Securities and Investments Commission has insisted that it cannot regulate cryptocurrencies and their derivatives as they are not an actual financial product.
Swyftx co-founder Alex Harper said that the decision not to proceed with the merger was in the best interest of both companies.
“The policy environment has changed significantly since we announced the merger and neither party has been able to realize the vision of the merger in any meaningful way”, Harper said.
Both companies have confirmed that they would prefer to focus on their core offerings separately.
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