Jack Mallers Steps Down as XXI Capital CEO as Tether Merger Plan Unravels

Jack Mallers Steps Down as XXI Capital CEO as Tether Merger Plan Unravels

Twenty One Capital, the Tether-controlled bitcoin treasury company, has replaced Chief Executive Officer Jack Mallers with Raphael Zagury, signaling the collapse of an ambitious plan to consolidate three bitcoin-focused businesses under a single publicly listed entity.

Mallers stepped down effective July 20 to return his full attention to Strike, the bitcoin payments startup he founded in 2020. His departure confirms that the proposed three-way merger between Twenty One Capital, Strike, and bitcoin mining firm Elektron Energy has been abandoned.

A Merger That Never Materialized

Tether first floated the combination in April, envisioning a vertically integrated bitcoin conglomerate that would unite treasury operations, consumer financial services, and energy production under the XXI ticker. The logic was straightforward on paper: combine bitcoin accumulation, a payments rail, and mining infrastructure to create a one-stop institutional bitcoin platform.

Three months later, that vision has come apart. Strike will remain independent and is no longer being considered for a business combination, the company confirmed. The fate of Elektron Energy within the revised strategy was not addressed in detail.

The unraveling underscores the difficulty of executing complex multi-party mergers in a sector where company valuations are volatile, regulatory scrutiny is intensifying, and the strategic rationale can shift rapidly with bitcoin's price.

New Leadership, New Direction

Zagury, who takes the reins as CEO, will steer Twenty One along a revised path focused on three pillars: acquiring operating businesses, expanding capital markets capabilities, and developing bitcoin-backed lending products. The new strategy reads less like a vertically integrated empire and more like a focused financial services firm built around bitcoin collateralization.

The pivot toward lending is notable. Bitcoin-backed lending has grown into a competitive corner of the crypto market, with firms ranging from Coinbase to Kraken offering products that allow holders to borrow against their bitcoin without selling. For XXI, which sits on a substantial bitcoin stack, extending credit against that collateral could generate recurring revenue streams that pure treasury companies lack.

The Bitcoin Treasury Landscape Shifts

Twenty One Capital holds 43,514 bitcoin, making it the second-largest corporate holder of the cryptocurrency behind MicroStrategy. That position was assembled during a wave of corporate treasury adoption that swept through 2024 and 2025, with companies across sectors adding bitcoin to their balance sheets as an inflation hedge and reserve asset.

But the market's enthusiasm for bitcoin treasury companies has cooled considerably. XXI shares were little changed in pre-market trading at $5.37 — a fraction of the highs above $30 reached during last summer's frenzy when investors bid up anything with exposure to bitcoin on the balance sheet.

The share price decline reflects a broader reassessment. As bitcoin's price stabilized and the novelty of corporate treasury exposure wore off, investors began demanding more than passive bitcoin holdings. Companies that once traded at significant premiums to their net asset value now trade at discounts, pressuring management teams to demonstrate operational value beyond simply holding the asset.

What This Means for Tether

For Tether, the failed merger represents a setback in its broader ambition to build an integrated bitcoin financial ecosystem. The world's largest stablecoin issuer has been diversifying aggressively, investing in mining operations, treasury companies, and payment infrastructure. The XXI vehicle was meant to be the centerpiece — a public markets proxy for Tether's bitcoin thesis.

Tether retains its controlling stake in Twenty One and clearly intends to continue building through the platform. But the loss of Strike removes a critical consumer-facing component from the strategy. Strike's Lightning Network payments technology would have given XXI a distribution channel to retail users — something that acquiring operating businesses and building lending products may not fully replace.

Mallers Returns to Strike

Mallers' return to Strike full-time comes at a critical juncture for the payments firm. Lightning Network adoption has grown steadily but faces increasing competition from other scaling solutions and payment networks. With the XXI merger off the table, Strike will need to chart its own path forward — potentially raising capital independently and proving that its payments model can achieve sustainable unit economics.

The separation may ultimately benefit both parties. Twenty One can focus on building a bitcoin financial services firm without the complexity of integrating a consumer payments startup, while Strike can pursue its mission without the constraints of a public company parent focused on treasury strategy.

For investors, the takeaway is clear: the era of slapping "bitcoin" on a corporate structure and watching the stock soar is over. The companies that survive will be those that build real businesses around the asset — and that is now Zagury's mandate at XXI.