Bitwise Asset Management has announced the acquisition of Attestant Limited, a leading institutional Ethereum staking provider with $3.7 billion in staked assets. This strategic transaction bolsters Bitwise’s institutional offerings by integrating non-custodial staking services with its existing portfolio of exchange-traded products, hedge funds, and private account solutions. The team and products will be rebranded to form Bitwise Onchain Solutions (Bitwise OS), which will continue Attestant’s Ethereum staking services while expanding into additional blockchain protocols and continuing to contribute to the open-source community.
The deal brings Attestant’s co-founders - Dr. Sreejith Das, Jim McDonald, and Dr. Steve Berryman—and its expert team under Bitwise’s umbrella, growing the organization to over 90 employees across the U.S. and Europe. Attestant’s clients, which include family offices, high-net-worth individuals, and DeFi protocols, will benefit from Bitwise’s scale and resources.
Hunter Horsley, CEO of Bitwise, described the acquisition as pivotal to Bitwise’s strategy:
"We want to be the best partner for investors in the crypto space. The Attestant team’s technical expertise and focus on compliance enhance our ability to help clients achieve their goals."
The transaction was supported by gunnercooke LLP, who advised the shareholders of Attestant, with Kathryn Dodds leading their team. Dodds and her colleagues, James Burnie and Mark Langford advised on the deal’s structuring and ensured compliance with regulatory and transactional complexities. gunnercooke’s expertise in Web3 transactions played a key role in completing one of the year’s most significant blockchain-sector deals.
Q&A with Kathryn Dodds
Kathryn, why is this transaction significant for a corporate lawyer?
Generally, M&A activity tends to follow certain well-defined pathways. This was not the case here, given that this transaction was the first of its kind in the United Kingdom. As such, there were no such defined pathways for the transaction to be based on, meaning that the structuring and legal solutions had to be bespoke to the intricacies of the new business.
Furthermore, the timing of the transaction can be seen as highlighting with the current paradigm shift in global thinking towards the cryptoasset industry, encapsulated recently in the US elections and the move in China to legalize trading in cryptoassets. In this respect, we have seen a huge reaction to the transaction, as some have perceived it as heralding a new era of Web3 business.
Kathryn, can you expand on the role your team had during this transaction and what were the primary legal challenges in structuring this acquisition?
We advised the shareholders of Attestant on the sale to Bitwise Asset Management. In this respect, we acted on the whole life cycle of the transaction, from heads of terms stage through to structuring, negotiation and final execution. We have advised Attestant since inception, so it was a privilege to be able to work on the sale, as we found that it was vital to have a tight-kit team that fully understood the complexities of the business.
A key challenge revolved around the fact that Attestant is a staking business. The volatility around the value of ETH meant that reaching a value in the context of the sale and how the volatility was accounted for in the mechanics of the SPA, was a particular challenge.
A consequential complexity of this was also the tax considerations, ensuring that the structuring of the transaction was done in the most tax efficient way for the sellers, whist also ensuring that the impact was net neutral for Bitwise.
In order to overcome these challenges, we were delighted to be able work closely with Upstreamly Ltd (tax advisors to Attestant) and Galaxy Digital Partners LLC (financial advisors to Attestant) on the sell-side and Latham & Watkins LLP (law advisors to Bitwise) and Menzies LLP (tax advisors to Bitwise) on the buy-side. The ability to work collaboratively with these firms helped ensure that the transaction was a smooth and successful one.
Lastly, it is worth noting that a large proportion of the team at Attestant have remained with the business post-completion. A collective effort was taken by all parties as to how best to structure the mechanics of the deal so that the continuing employees are both excited and incentivized to grow the business with Bitwise post-completion.
How did gunnercooke leverage its Web3 expertise to facilitate the transaction?
gunnercooke has a specific Web3 sub-division, WAGMI Advisers gunnercooke, which is the largest onshore advisory firm specializing in Web3. The team has been advising Web3 firms since advising on the first successful initial coin offering in the United Kingdom.
The breadth of the gunnercooke practice means that we are in the privileged position of being able to work with firms ranging from start-ups seeking a cost-effective launchpad to the largest players within the Web3 ecosystem. As such, our team have been with Attestant from inception, meaning that we had a fluent understanding of the business before the transaction even started.
Attestant was built from the start to be a premium player in ETH staking, combining an approach of using the leading experts on the Ethereum blockchain and a compliance-first approach, and it was a delight seeing the business mature into a successful acquisition for Bitwise.
Kathryn, what role did gunnercooke play in negotiating terms favorable to both parties?
Attestant (and Web3 generally), was built on the foundations of fairness and collaboration and we adopted this mindset throughout negotiations to ensure terms were favorable and served both parties in the long-term. Given the nature of Attestant’s business and the deal mechanics, a large part of our role involved coming up with unique legal solutions to fit the nuances and also ensuring that all parties understood the rationale for such solutions. When negotiating an M&A transaction, both sides are working for a common purpose, and given the fact that most of the Attestant team were staying post-completion, this was especially true on this transaction. Both parties understood that an element of compromise was needed in negotiations, and it was really pleasing to see such a collaborative effort by all involved.
From a regulatory perspective, a core aspect of the negotiation was translating the cultural regulatory gap between US regulatory concerns and those in the United Kingdom. As different regulators take different approaches to determining whether and how staking should be regulated, it was interesting to see how, despite both jurisdictions being relatively regulation heavy, there were fundamental differences in approach. Working with the Bitwise team to understand and bridge this gap was both intellectually difficult and rewarding, and it was great to see Bitwise’s commitment to ensuring that Attestant’s compliance first approach was maintained.
What key takeaways from this transaction could benefit other Web3 firms considering M&A activities?
Firstly, it is important to ensure that your house is fully in order before starting to consider M&A activities. Contrary to popular belief, Web3 has in many ways become a very regulated industry, and we are seeing a trend of increasing regulation over the next few years. In this respect, we are now seeing firms asking for legal and compliance audits ahead of potential transactions, in order to reduce the number of red flags that arise during the transaction, and consequently to ensure that optimal pricing on the transaction is achieved.
Furthermore, as the Web3 ecosystem is still relatively nascent, it is important to work with the correct advisors. In this respect, for example, Galaxy Digital Partners are one of very few financial advisors that specifically work in, and therefore understand, Web3.
More generally, given the complex nature of the businesses involved in Web3, the ability to be flexible and compromise is key. In this respect, in my experience founders generally have a core vision for their business and will not want to see that tarnished in a transaction. The cultural alignment of Bitwise and Attestant was a core driver behind the success of this transaction, as both sides understood the benefit in terms of Bitwise acting as a launchpad to the Attestant business reaching a truly global audience whilst in no way compromising on the quality associated with the product. In fact, it was amazing to see the positive response by the Web3 community more generally to the transaction, as it was seen as a step towards creating a more mature industry.
Another interesting take away from the transaction was the fact that it underlined the importance attributed to the skill of the individuals involved. A key motivator for the transaction was not simply to obtain Attestant’s technology and client base, but also the team behind them. Indeed, within a few weeks of the transaction, the Attestant team is helping Bitwise launch a range of new products, as part of its Onchain Solutions product range, allowing Bitwise clients to stake on new chains such as Starknet. We are seeing this as part of a broader trend within Web3, as there is a significant premium on getting the right team involved in a project – as using a substandard team can cause real loss to an enterprise, for example, because of a greater risk of being hacked.
This has created an interesting shift in the dynamic when negotiating transactions, as there is a much greater focus on ensuring that the teams are in a position to work cohesively together post transaction, rather than simply looking for a short-term gain. This means that successful transactions are not necessarily simply about aggressively seeking to negotiate on price, rather there is a need to consider the sensitivities of the particular individuals involved to ensure that, post-acquisition, the talent, and the value that brings, is properly incentivized to stay with the business.
Lastly, we would note that the transaction was greatly helped by the professionalization of all those involved. The rapidly evolving nature of Web3 means that an in-depth understanding of how it works is mandatory in order to be able to give proper advice on a transaction. This is only likely to become even more important - we are seeing that as we work with new sui generis constructs such as DAOs, this raises fresh new questions that only those who live and breath the industry will be able to solve.
For more information regarding WAGMI Advisers gunnercooke, please see: https://wagmiadvisers.xyz/
