Another CEX Secretly Files for IPO
In a surprising turn of events, the cryptocurrency exchange Bullish has reportedly submitted a confidential application for an initial public offering (IPO). While Bullish may not be a household name within the crypto trading community, its origins are quite notable. Following the successful market debut of Circle—which issues the USDC stablecoin—Bullish’s move comes at a time when interest in crypto-related financial instruments is surging. Circle’s IPO not only raised $1.1 billion but also saw its shares soar by 168% on the first day of trading, positioning it as the first publicly traded stablecoin. Shortly after, Gemini also filed for an IPO, making Bullish’s secret application all the more intriguing.
Origins and Ambitions of Bullish
Despite being relatively unknown, Bullish’s lineage is significant, tracing back to the 2018 launch of EOS, which was touted as a rival to Ethereum. The parent company, Block.one, conducted the largest initial coin offering (ICO) in history, amassing an astonishing $4.2 billion. However, as interest in EOS waned, Block.one shifted its focus to developing Bullish, a cryptocurrency trading platform designed with compliance in mind, aiming to connect with the traditional financial sector. This pivot, however, alienated the EOS community, which felt abandoned as Block.one transitioned to Bullish. Officially launched in July 2021, Bullish kicked off with impressive backing: $100 million in cash from Block.one, 164,000 bitcoins valued at approximately $9.7 billion, and 20 million EOS tokens, complemented by an additional $300 million from high-profile investors such as Peter Thiel and Mike Novogratz.
Focus on Compliance Over Size
From the outset, Bullish has made it clear that compliance is its primary objective, rather than merely achieving a large market presence. The platform’s aim is to establish a formal trading venue that meets regulatory standards. In a strategic move before operations commenced, Bullish engaged with the public company Far Peak, investing $840 million for a 9% stake and planning a merger valued at $2.5 billion to facilitate a more accessible listing process. At the time, this merger was reported to value Bullish at around $9 billion. Thomas Farley, previously the CEO of Far Peak and well-versed in compliance from his tenure at the New York Stock Exchange, now leads Bullish. He brings with him valuable connections in Wall Street and extensive regulatory experience.
Shifting Regulatory Landscape
However, the path to compliance has proven to be more challenging than anticipated. Following the heightened regulatory scrutiny in the U.S., Bullish’s merger plan fell apart in 2022, thwarting its IPO ambitions. The company also explored acquiring the troubled exchange FTX for quick growth, but that plan did not materialize. Consequently, Bullish has sought new avenues for compliance, including expansion into Asian and European markets. Earlier this year, Bullish secured crucial licenses from the Hong Kong Securities and Futures Commission, enabling it to engage in securities trading and automated trading services, as well as a virtual asset trading platform license. Additionally, it received a crypto asset trading and custody license from Germany’s BaFin. With a workforce of around 260, over half of which is based in Hong Kong, Bullish maintains a global presence.
Aligning with Regulatory Standards
A distinct characteristic of Bullish is its preference for USDC over Tether, which aligns with its compliance-focused strategy. The platform predominantly facilitates trading pairs in USDC, reflecting its commitment to regulatory standards amidst increasing pressure on Tether from U.S. regulators. In contrast, USDC—developed by compliant entities Circle and Coinbase—has gained traction, particularly following its successful IPO. This year, USDC’s trading volume on centralized exchanges surged dramatically, reaching $38 billion in March, a stark increase from an average of $8 billion monthly in 2023. Bullish and Bybit have emerged as the leading platforms for USDC trading, commanding approximately 60% of the market share.
The Complex Relationship Between Bullish and EOS
The relationship between Bullish and EOS can be succinctly described as one of former and current ties. Following the announcement of Bullish’s IPO application, EOS’s price saw a 17% rise, yet the sentiment within the EOS community is largely negative. This stems from Block.one’s decision to pivot to Bullish, abandoning EOS. Initially launched in 2017 with high expectations, EOS raised $4.2 billion through its ICO, only to face significant challenges post-launch. Users quickly discovered that the promised capabilities were overstated, leading to dissatisfaction with the platform’s performance and governance.
Block.one’s Controversial Resource Allocation
The decline of EOS can be attributed not only to technical shortcomings but also to mismanagement of resources by Block.one. The company had pledged to invest $1 billion in supporting the EOS ecosystem, yet it diverted funds into U.S. Treasury bonds and speculative investments, leaving developers without adequate support. The concentration of power within Block.one further alienated the EOS community, culminating in a rift that saw Block.one and EOS part ways. In 2021, when Bullish was launched, it was perceived by many as a betrayal, as it had no ties to EOS technology or tokens, prompting backlash from the EOS community.
The Financial Success of Block.one
Block.one’s financial maneuvers have raised questions, particularly regarding its handling of the $4.2 billion raised during EOS’s ICO. A 2019 email from then-CEO Brendan Blumer revealed that Block.one held assets totaling $3 billion, with approximately $2.2 billion invested in low-risk U.S. government bonds. This strategy has proven lucrative, with Block.one currently holding 160,000 bitcoins, worth over $17 billion today. This investment has yielded significant returns, demonstrating that while Block.one may not have cultivated a thriving blockchain ecosystem, it has excelled at asset preservation and growth.
The Irony of Success in the Crypto World
Ultimately, the narrative in the cryptocurrency arena often reveals a disheartening reality: success may not always align with technological innovation or passionate ideals. Instead, it frequently favors those adept at navigating regulatory landscapes and preserving capital. In this complex environment, the entities that thrive are often those that prioritize compliance and strategic foresight over the foundational principles that initially inspired the crypto movement.
