Crypto exchange Swyftx and superannuation platform Superhero walk away from $1.5b merger

A $1.5 billion merger between two Australian investing apps that was set to create a powerhouse that would allow cryptocurrencies, shares, and superannuation to be managed in the one place has seen the deal collapse.

Brisbane-based crypto exchange Swyftx and online broker and superannuation platform Superhero announced the move would bring 800,000 customers under the one roof.

The two companies had trumpeted the “historic merger” with Swyftx co-founder Alex Harper stating the move was an “evolution from disruptive tech players into a single, major financial institution that can grow across domestic and international markets” back in June.

But now the AustralianFinancial Reviewrevealed that Swyftx will sell Superhero back to its founders, John Winters and Wayne Baskin, and its investors after the crypto sector had taken a hit amid a regulatory crackdown.

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It comes as Swyftx laid off 35 per cent of its staff in a second round of brutal cuts in December, blaming the mass sackings directly on the FTX collapse when the $32 billion cryptocurrency exchange filed for bankruptcy amid bombshell revelations.

It had previously sacked 21 per cent of its workforce back in August with one employee learning she had lost her job while on honeymoon in Hawaii.

Swyftx, which has around 600,000 customers, had launched a capital raising in November to fund its growth plans and the Superhero integration.

But Mr Harper said the decision to part ways was due to regulator hostility in the crypto sector.

“The policy environment has changed significantly since we announced the merger and neither party has been able to realise the vision of the merger in any meaningful way,” he told the AFR

“We currently face a scenario where there might be no realised benefits to customers from the merger until 2024 at the earliest.

“It is a disappointing outcome but ultimately, we took this decision in the best interests of both Superhero and Swyftx, as well as their customers.”

Staff were told the deal had collapsed in a private messaging thread on Tuesday.

ASIC chairman Joe Longo has nominated targeting the unregulated crypto sector as part of its corporate regulatory activities and it has launched a range of actions this year.

Finder is being sued by the ASIC for allegedly providing illegal financial advice and putting consumers at risk of harm after offering a cryptocurrency product without a financial licence.

It commenced civil proceedings in the Federal Court against a subsidiary of Finder for a product offered via its registered cryptocurrency exchange called Finder Wallet.

It is ASIC’s third recent action against a firm offering a crypto-asset related product that the regulator considered to be a financial product.

ASIC had also lashed out at stockbrokers adding “harmful” features to their platforms.

“Crypto assets are high-risk, volatile and complex,” ASIC Commissioner Danielle Press said back in August.

“Brokers should think very carefully before offering crypto assets through their share trading apps.”

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