Justin Sun is making moves again, and a grand capital operation drama surrounding Tron is quietly unfolding. This time, he is targeting the U.S. stock market—with a plan for a reverse merger to seek Tron’s official debut in the American capital market.
On Monday (June 16), Nasdaq-listed company SRM Entertainment announced that it has reached an agreement with Tron, whereby SRM will invest $100 million to purchase Tron tokens. Subsequently, the company will be renamed "Tron Inc.," and Justin Sun will join the company as an advisor.
After the announcement of the deal, SRM's stock price soared over 300% on Monday, rising from last Friday's closing price of $1.45 to a high of $6.70.
The specific source of this funding was not disclosed in the announcement, only revealing that if all attached warrants are exercised, the total investment valuation will rise to $210 million. However, SRM did not disclose Tron’s future operational arrangements and did not directly respond to whether this transaction involves a change in control. It can be confirmed that the mastermind behind this transaction is the boutique investment bank Dominari Securities, headquartered in New York.
According to reports from the Financial Times citing informed sources, the $100 million actually comes from Tron itself, aiming to inject capital into SRM and complete a reverse merger, thereby bypassing the traditional IPO process to achieve the goal of listing in the U.S. More attention is drawn to the political resources behind the participants. Dominari Securities' parent company, Dominari Holdings, welcomed two special board members in February this year—Donald Trump Jr. and Eric Trump, the two sons of former U.S. President Donald Trump.
Due to the involvement of entities that may benefit the Trump family from this investment, some politicians and ethics experts have raised concerns about potential conflicts of interest. In response, the Trump camp stated that its business assets have been entrusted to a trust managed by his children to avoid conflicts of interest.
The capital market tests crypto companies: Who stands firm after going public?
Although the news of Tron’s reverse merger is highly anticipated, it is not an isolated case in the broader context of the crypto industry. As early as 2021, U.S. crypto exchange giant Coinbase successfully landed on Nasdaq, becoming the first mainstream crypto platform to go public.
From historical data, Coinbase's market value exceeded $86 billion on its first day of trading, but due to its business being highly dependent on market conditions, its stock price subsequently experienced significant volatility. During the crypto winter of 2022, Coinbase faced multiple pressures, including declining revenue and regulatory scrutiny, with its stock price dropping over 80% from its peak. However, with the approval of Bitcoin ETFs in 2024 and stabilization of Federal Reserve policies, Coinbase gradually regained its vitality.
In addition to crypto trading platforms, some hardware manufacturers in the blockchain industry and Bitcoin mining companies have also chosen to go public for financing, but their stock prices have also fluctuated dramatically after listing.
For example, Canaan Creative, a company focused on crypto mining machine manufacturing, went public on Nasdaq in 2019, but its valuation at IPO was far below expectations. In the following years, Canaan's stock price was significantly affected by fluctuations in the cryptocurrency market, especially during the 2021 crypto bull market when its stock price surged, but it subsequently plummeted as cryptocurrency prices fell, with the stock price failing to maintain stability for a long time.
Similar situations have also occurred with Bitcoin mining companies Marathon Digital Holdings and Riot Platforms. The profitability of these mining companies is highly dependent on Bitcoin prices and electricity cost fluctuations, with the 2021 bull market bringing a surge in stock prices, while the 2022 bear market saw declines of over 70%.
The entire crypto market is highly volatile, and this risk can easily transmit to stock prices. Ultimately, whether Tron can truly win the trust of the capital market depends on whether its ecosystem is stable enough and whether its value can be clearly articulated.
Reverse Merger vs. Traditional IPO: Analyzing the Capital Shortcut Behind Tron’s Listing
A reverse merger, also known as a "backdoor listing," is essentially finding a struggling public company and "buying" it. This company may no longer be operational, but it still holds its listing qualifications, making it a ready-made "shell." After acquiring control, the acquirer can inject its quality assets, and the original "shell" is revitalized. Typical cases include Tesla's early reverse merger and many Chinese concept stocks transitioning from the OTC market to Nasdaq.
From a practical operational perspective, Tron’s choice of a reverse merger is primarily based on a comprehensive consideration of efficiency, cost, and regulatory risk:
Unlike traditional IPOs, which can take 12 to 18 months, a reverse merger can typically be completed in 3 to 6 months. Tron aims to quickly enter the U.S. stock market, taking advantage of the current "policy tailwind" for crypto assets.
Traditional IPOs heavily rely on underwriters, regular hearings, roadshows, and detailed disclosures, while a reverse merger only requires acquiring an already listed shell company and submitting simplified documents, making the compliance path more straightforward and the regulatory threshold lower. Especially in light of the SEC's investigation pause regarding Justin Sun, Tron has opted for a listing path with a higher "margin of safety."
SPACs or reverse mergers typically allow both parties to negotiate valuations in advance, providing greater pricing autonomy in unstable market conditions. Additionally, two rounds of financing (for example, SRM will refinance $100 million) provide the company with funding support and capital structure configuration.
Reverse mergers avoid the high underwriting fees and complex listing costs associated with IPOs. Although SPACs may involve some dilution, for a capital-rich Tron, this discount is acceptable. By injecting token assets into the listed company, future token-to-equity operations can also be flexibly arranged.
If a traditional IPO is forced to halt or delay during a market downturn or tightening regulatory atmosphere, the risks are high. A reverse merger occurs internally within the SRM shell company, unaffected by market sentiment and IPO window cycles.
However, while the reverse merger route may seem convenient, it is fraught with pitfalls. Those "shell" companies waiting for a buyer may carry unseen debts or lawsuits. Even if a successful listing occurs, the stock price may remain stagnant, making refinancing difficult. With increasing regulatory scrutiny, attempting to "overtake on a curve" without real capability can easily lead to failure.
Breaking Through Amid Controversy: Justin Sun’s Capital Challenge
Justin Sun, a highly controversial and talked-about entrepreneur in the blockchain space, has always been a focal point in the crypto industry. Since founding Tron, he has been known for his strong personal style and high-profile market operations.
However, regulatory risks have always followed closely behind. In 2023, Justin Sun and three companies under his umbrella, including Tron, were sued by the SEC for allegedly selling unregistered securities and market manipulation. However, in February of this year, the SEC suddenly applied to the court to pause its lawsuit, a turn of events that surprised many regulators who were originally optimistic about the case's outcome.
From a market perspective, Justin Sun's personal image is closely tied to Tron's development. His high-profile capital operations have brought attention and funding support to Tron, but they have also created uncertainty for investors regarding its future. If Tron can stabilize its position and continue to promote technological innovation and ecosystem development, it is likely to gain recognition from the capital market; however, if regulatory pressure continues to escalate or the market environment deteriorates, Tron and Justin Sun behind it may face a dual challenge of trust crisis and valuation volatility.
Related: JPMorgan Applies for "JPMD" Trademark for Crypto Payment Services
Original article: “Tron’s Reverse Merger: Is Justin Sun’s U.S. Stock Market Adventure Beginning?”
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