Crypto companies seeking to go public over the past year have faced increased scrutiny from the Securities and Exchange Commission, as financial distress and failures spread across the volatile industry. WSJ: Crypto-focused companies including Bullish Global, Circle and eToro have failed to secure the SEC approvals that are required of companies going public. The firms were seeking stock-exchange listings through mergers with special-purpose acquisition companies, an alternative path to going public that thrived in 2020 and 2021 before heightened regulatory checks and market turbulence ended the SPAC boom. Another crypto broker, Galaxy Digital has faced repeated rounds of questions from SEC staff about its business since filing paperwork to go public on the Nasdaq Stock Market, according to people familiar with the questioning.
Galaxy, which isn’t using a SPAC structure, announced in March 2021 that it wanted to become a U.S.-listed public company and hoped to clear SEC review by the end of that year. The SEC didn’t set out to stop the companies from going public, according to a person familiar with the matter, but crypto firms believe the pace of the agency’s review hurt their efforts, particularly after the crash of a well-known cryptocurrency and the failure of a large crypto hedge fund that hit many exchanges and lenders. The bankruptcy of crypto exchange FTX and a bear market in digital asset prices may keep the door closed.