The Risks of Coincheck Going Public via SPAC

Recently, it was announced that the Japanese exchange Coincheck is planning to become one of the two publicly listed exchanges in the United States, alongside Coinbase. This move is set to take place by the second or third quarter of this year through a partnership with special purpose acquisition company (SPAC) Thunder Bridge Capital Partners IV (THCP). However, the decision to go public via an SPAC raises concerns among investors due to the poor performance of many SPACs in the public market.

While using a SPAC to go public eliminates the need for the traditional initial public offering process, it does not guarantee success. In fact, data shows that a significant number of companies that went public via SPACs have faced financial troubles, with some even going bankrupt. The overall capitalization of such companies has also seen a decline, leading to substantial losses for investors.

As one of the largest crypto exchanges in Japan, Coincheck boasts a sizable user base of 1.98 million verified users. With operations dating back to 2014, the exchange has built a solid reputation over nearly a decade of service. However, its decision to go public at a time when the SEC is intensifying its regulatory scrutiny of the crypto industry raises questions about the potential risks involved.

SEC’s Regulatory Scrutiny

In recent months, the SEC has been stepping up its oversight of cryptocurrency firms, issuing Wells Notices to companies like Consensys, Uniswap, and Robinhood’s crypto arm for alleged violations of securities laws. The SEC Chair, Gary Gensler, has emphasized the need for greater transparency and disclosure in the crypto space, arguing that many cryptocurrencies should be considered securities tokens.

While Coincheck’s decision to go public via SPAC may offer certain advantages in terms of expedited listing, it also exposes the company to significant risks given the track record of SPACs in the public market. As the regulatory landscape for cryptocurrencies continues to evolve, companies in the industry will need to navigate these challenges carefully to ensure compliance and protect investors’ interests.