Twenty One Capital, a Tether-controlled bitcoin ($BTC) treasury company that’s paid Strike’s Jack Mallers to be its spokesperson, has until Friday to comply with an independent director rule under threat of the New York Stock Exchange (NYSE) flagging its stock with code BC, Below Compliance.
It doesn’t help that its stock has lost 83% of its value over the past year.
This morning, Twenty One Capital disclosed the Friday deadline. It’s known about the deficiency for about two weeks, including a formal non-compliance notice it received from NYSE last week.
Although a BC flag by NYSE is a clear warning, it is not an automatic halt or delisting. The company typically receives a time period to regain compliance.
The trigger for NYSE’s warning was Twenty One’s May 19 transaction. On that day, Tether bought out SoftBank’s entire 89,106,748 Class A share position and cancelled its matching Class B shares.
That same deal terminated a governance agreement that had given SoftBank a veto on board composition and other material corporate actions.
SoftBank’s two directors, Jared Roscoe and Vikas Parekh, resigned the same day.
SoftBank exits Tether-backed Twenty One after stock falls 84%
Importantly, Roscoe sat on the audit committee. As a result, his departure left only one independent member of the two required by NYSE on that particular committee during Twenty One’s post-listing transition period.
Twenty One must remedy audit committee non-compliance
On May 29, the NYSE formally sent Twenty One a non-compliance notice.
The deadline for remedying the situation is Friday. If not cured by that date, a BC indicator will accompany Twenty One to XXI’s NYSE profile, market data, and news pages on June 9, with further enforcement to come.
Twenty One says it expects to appoint an additional independent audit committee member promptly. It didn’t specify who has the power to pick a sufficiently independent director.
It is a so-called bitcoin ($BTC) treasury company, last disclosing 43,514 $BTC in holdings. Although its $BTC is worth $3.1 billion, the entire market cap of Twenty One is less than $2.5 billion.
Amid uncertainty about Tether’s leadership and Tether-aligned Raphael Zagury taking over many of Mallers’ former responsibilities, as well as Mallers’ broken promises to launch a variety of profitable business operations under the Twenty One umbrella over the past year, its stock has lost more than four-fifths of its value over the past 12 months.
Tether CEO Paolo Ardoino reiterated on May 20 that his company’s conviction in Twenty One had only deepened, and that he looked forward to building on that foundation.
Nine days later the foundation was out of compliance with NYSE rules. Twenty One has until Friday to find a sufficiently independent director.
