Both parties first announced the merger in June. The deal was to create a wealth management behemoth that would administer $1 billion in crypto, superannuation and direct equities investments, for up to one million customers in Australia.
Now, the deal is off and the regulatory climate for crypto in Australia is reportedly to blame. AFR quoted Superhero co-founder John Winters as saying that investor sentiment for crypto products had declined in the country. Winters also linked the failure of the merger to the fallout of the recent FTX collapse. The Superhero co-founder added that the firm was turning its attention to “long-term traditional investments” that had “more transparency.”
AFR also quoted sources close to Superhero who offered more context for the collapse of the merger. These sources say Superhero was concerned about Swyftx’s exposure to the Binance crypto exchange. Binance continues to come under scrutiny from regulators, especially in the U.S. where the platform is being investigated for alleged money laundering.
The demerger news is the latest business failure for Swyftx. The Australian crypto exchange laid off 90 employees from its workforce earlier in the month. This was the second round of employee redundancies after the crypto exchange laid off 74 employees in the summer.
The collapse of the deal is also the latest crypto-related merger to fall through this year. The likes of Circle, crypto miner Prime Brokerage, and Binance have seen SPAC deals fail to materialize in 2022.