Twenty One faces NYSE warning after SoftBank board exit

Twenty One Capital has received a New York Stock Exchange warning after board changes left its audit committee short of the required number of independent members.

Twenty One Capital disclosed that it received a notice of non-compliance from the NYSE on May 29. The notice relates to the audit committee of the company’s board.

The company said it must fix the deficiency by June 5. If it does not, NYSE will mark the stock with a below-compliance indicator from June 9.

SoftBank exit created the audit gap

The issue followed a May 19 transaction in which Tether International bought SoftBank’s full stake in Twenty One. SoftBank sold 89,106,748 Class A shares to Tether International.

At the same time, 89,106,748 Class B shares held by SoftBank were canceled. The transaction also ended a governance agreement involving Twenty One, Tether Investments, SoftBank and Bitfinex.

SoftBank-linked directors Jared Roscoe and Vikas J. Parekh resigned from the board and its committees after the transaction closed. The company said the resignations were not tied to any disagreement over operations, policies or practices.

Roscoe had served on the audit committee. His exit left the committee without two independent directors, the NYSE minimum during the company’s transition period.

Company plans to add an independent member

Twenty One said it expects to appoint another audit committee member as soon as practicable. The person must meet independence standards under SEC Rule 10A-3 and NYSE rules.

The company also said the NYSE marker will be removed once it regains compliance with all required exchange standards. The filing noted that continued non-compliance could bring further listing risk.

That statement remains a risk notice, not a delisting decision. The current warning does not automatically remove Twenty One from the NYSE.

The company trades under the ticker XXI. It is known as a Bitcoin treasury firm backed by Tether, Bitfinex and Cantor Fitzgerald, with Strike founder Jack Mallers leading the company.

Governance issue follows major ownership changes

As previously reported, Tether recently bought out SoftBank’s position in Twenty One, giving it tighter control over the listed Bitcoin vehicle.

Separate coverage reported that Tether backed a merger plan that could combine Twenty One with Strike and Elektron Energy. That proposal would add payments, financial services and mining to the company’s Bitcoin treasury model.

Meanwhile, Twenty One launched with more than 43,500 Bitcoin and faced market pressure after going public through a Cantor Fitzgerald-backed SPAC.

The NYSE warning now adds a governance issue to that wider story. Twenty One has until June 5 to name a qualified independent audit committee member before the below-compliance marker appears.