Tether’s ambitious plan to merge three of its portfolio companies has officially collapsed, with Twenty One Capital CEO Jack Mallers stepping down from the role and Elektron Energy chief Raphael Zagury taking over as the new CEO.
According to a report from Bloomberg, Twenty One Capital (NYSE: XXI), Strike, and Elektron Energy will no longer be combined into a single Bitcoin-native platform, ending a plan Tether first floated in April 2026.
What Happened
The three companies confirmed that the proposed consolidation is off the table in its original form. Strike, the Bitcoin payments firm founded and led by Mallers, will remain a standalone company. Talks between Twenty One Capital and Elektron Energy are still ongoing, but Strike is no longer part of that conversation.
In a separate press release, Twenty One Capital confirmed that its Board of Directors appointed Raphael Zagury as CEO effective July 20, 2026. Zagury, who founded and led Elektron Energy, one of the largest Bitcoin mining operations globally, is now steering XXI into what management is calling its “next phase.”
Why Mallers Stepped Down
Per the official announcement, Mallers is stepping away from Twenty One Capital to focus full-time on Strike during “its next phase of growth.”
Explaining the shift, incoming CEO Raphael Zagury told: “The structure evolved as Jack decided to focus full-time on Strike and I stepped in to lead Twenty One. Strike is continuing to grow independently, and Twenty One is focused on building the operating, governance, and capital markets foundation for its next phase.”
Mallers, who had juggled the CEO seat at both Strike and Twenty One Capital since April 2025, had repeatedly assured investors that his dual role would not distract him from Strike. In an April 2025 letter to Strike investors, he had written, “This is not a shift in my commitment; it’s an extension of it.”
That balance appears to have run its course. In his own farewell statement, Mallers said, “I’m grateful to everyone at XXI and everyone who believed in what we built.” A representative for Mallers did not respond to Bloomberg’s request for further comment.
Tether’s Response
Paolo Ardoino, CEO of Tether and a Twenty One Capital board member, thanked Mallers for his role in taking the company public via the Cantor Equity Partners SPAC merger in December 2025.
“Jack played a foundational role in building XXI. He took conviction in Bitcoin and turned it into a public company, and we’re grateful for that. Now that we embark on the next chapter, Rapha is one of the best operators in this industry, with a track record of building businesses with strong cash flows and disciplined execution.”
New Direction: Cash Flow Over Pure Accumulation
Zagury signaled that Twenty One Capital will pivot away from the pure Bitcoin-accumulation playbook popularized by Michael Saylor’s Strategy (NASDAQ: MSTR). Instead, he wants XXI to generate cash flow and enforce more discipline in how it allocates capital.
“My job is to build the operating company around it, with the discipline, governance, and executional rigor of an institution,” Zagury said. “I believe our business will perform best when we also focus on the cash flow we generate and the rigor with which we allocate capital, not only by the Bitcoin we hold.”
This is a meaningful strategic shift. Under Mallers, XXI’s pitch was built around growing Bitcoin per share (BPS) and using capital markets leverage to accumulate BTC faster than organic price appreciation, essentially a mirror of the Strategy playbook. Zagury is signaling a move toward operating cash flow, which reads as a response to how brutally the market has punished pure-play DATs during this Bitcoin drawdown.
XXI Stock: The Damage So Far
The market reaction reflects how far sentiment has swung against Bitcoin treasury vehicles.
Twenty One Capital’s share price has slumped nearly 40% from its early-May 2026 peak to $5.32. That is a steep fall from highs above $30 seen during last summer’s digital-asset treasury company frenzy. Pre-market on July 21, XXI shares were little changed at $5.37.
For context, Strategy (MSTR) reported a $12.54 billion paper loss in Q1 2026 when Bitcoin fell 22%. XXI’s smaller balance sheet means smaller absolute losses, but the percentage sensitivity is similar, and the market has not been kind to the entire DAT category through this cycle.
Twenty One Capital: A Quick Recap
Twenty One Capital launched publicly in December 2025 through a SPAC merger with Cantor Equity Partners, backed by heavyweight names like Tether, SoftBank Group (TSE: 9984) and Cantor Fitzgerald. At launch, it held over 40,000 BTC, making it the third-largest corporate Bitcoin holder at the time.
As per BitcoinTreasuries.Net, the company now holds 43,514 BTC, making it the second-largest corporate holder of the asset globally, behind only Strategy.
The Bigger Picture
Bitcoin treasury companies, or DATs, have been under heavy pressure as BTC’s price has slumped, triggering losses and layoffs across the sector. The original April 2026 proposal from Tether was designed to build a vertically integrated Bitcoin operating company, combining treasury (Twenty One), trading and payments (Strike), and mining (Elektron) under one publicly traded roof, a structure that would have handled roughly 5% of the entire Bitcoin network’s hashrate through Elektron alone.
With that vision now scrapped, three things stand out for investors watching this space:
- Tether is consolidating control. Ardoino’s fingerprints are all over this transition, and Zagury is a Tether-aligned operator now running two of the three original merger candidates.
- The DAT model is being rewritten in real time. XXI’s pivot toward cash flow and disciplined capital allocation suggests the “buy Bitcoin, issue equity, repeat” thesis is losing credibility with public markets.
- Strike stays independent, and Mallers stays a Bitcoin figurehead. Whether Strike’s payments business can grow into the valuation it will eventually need is now the more interesting question for the Mallers story.
Also Read: Coinbase CEO Responds to Base Backlash Over Memecoin Speculation
